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of Rome, the Common Market will embrace a population of about one-quarter of a billion people with a gross national product, on the basis of 1961 figures, exceeding $340 billion. And it will be an expanding market; the creation of internal free trade within the area of the Community is unleashing strong dynamic forces that are giving a new energy both to industry and agriculture. As a result, the member nations today are experiencing a rate of growth more than twice that of the current growth rate of the United States.

III

The creation of this new market will have a great significance for America.

For one thing, it will afford market opportunities for American exporters of a kind unparalleled in our experience as a trading nation. By helping the nations of Europe to regain health and vigor through the Marshall plan we made it possible for them to become our best customers. Even before the European Community was created our exports to Europe were expanding as European incomes rose.

With the emergencies of the Common Market, however, the opportunities in Europe will expand and change in character. American producers will find in Europe something that they have hitherto known only in the United States-a great mass market for their products. The rapid growth already demonstrated by this market is generating ever-larger demands for American goods. This flow of goods across the Atlantic can, and no doubt will, grow ever greater as the trade-expanding effects of these increasing demands are realized particularly if we take the necessary measures to reduce impediments to that flow by bringing about a reduction of Europe's common external tariff.

But the coming into being of the Common Market will also have other effects on trade-so-called trade-diverting effects. The extent to which these trade-diverting effects may prove adverse to American interests will depend upon whether or not President Kennedy is equipped with the powers that will enable him, by negotiating trade arrangements with the Common Market, to reduce the level of the common external tariff.

A great deal has been said about the disadvantage to U.S. producers that will result from the Common Market, but the precise measure of that disadvantage is not always understood. As the European Common Market becomes fully effective, a manufacturer in Detroit selling to a customer in Dusseldorf will be at this disadvantage as against a manufacturer in Milan: He will have to sell his goods over a common external tariff while the manufacturer in Milan will not. But of course, advantages and disadvantages are reciprocal. A manufacturer in Dusseldorf selling to a Texas customer will be at a similar disadvantage as against the manufacturer in Detroit; he will have to sell his goods over the barrier of our own common external tariff, while the producer in Detroit will not.

The existence of this situation poses a simple question: Should the United States and the European Community agree together to reduce the level of this mutual disadvantage in the markets of each other by reducing the level of their common external tariffs, for the benefit not only of one another but of the whole free world?

IV

The answer to this question has two aspects-one political and one economic. Let us consider each in turn.

In approaching the political question we should be quite clear in our minds as to the nature of the European Economic Community. It is, of course, a trading entity, but it is far more than that. In signing the Treatry of Rome in 1957, which created the Community, pat the present six member nations-France, Italy, Germany, and the rou three Benelux countries-performed a solemn act of large politicalork implications. The main driving force behind the creation of the USE Community was the desire to lay the groundwork for a united Europe. To many of its proponents the Treaty of Rome marked the beginning of a process that may lead ultimately to the creation of something resembling a United States of Europe.

The signatory nations to the treaty took far-reaching commitments. They agreed not only to create a common market but also to undertake a wide spectrum of common action covering all aspects of economic integration including the concerting of monetary and fiscal policy, the harmonization of social security systems, the development of a common antitrust law, common provisions for the regulation of transport, the free movement, not only of goods but of labor, capital, and services, and so on.

Equally as important, the treaty provided for the creation of a set of institutions, comprising an executive in the form of a Commission and Council of Ministers, a parliamentary body in the form of an Assembly, and a court-the Court of Justice of the Community—that by its decisions is building up a formidable body of European jurisprudence. I emphasize these aspects of the Rome Treaty because there is a tendency to focus on its impact on commercial policywhich is merely one of the aspects of the European Community-to the exclusion of the other broad provisions of the treaty.

If we think of the European Community in this way we can begin to comprehend its larger political implications. If the negotiations for British accession to the Community succeed we shall have on either side of the Atlantic two enormous entities. On our side a federation of States tied together by developed institutions and a century and a half of common experience to form a nation that is the leading world power; on the other, a community of states, trading as a single market, and seeking among themselves to perfect the common policies and institutional arrangements that can lead toward increasing economic and political integration.

Between them these two entities will account for 90 percent of the free world's trade in industrial goods and almost as much of the free world's production of such goods. Between them they will represent the world's key currencies; they will provide the world's principal markets for raw materials; and they will constitute the world's principal source of capital needed to assist the less developed countries to move toward independence and decent living standards. LEC+ Great as each of these entities may be, they will be deeply interde-w. pendent. The experience of the great depression brought home to Europe and America the fact that not only prosperity but hardship is ' indivisible. Tied together by interrelated markets, commanding a

common technology, reacting to similar wants and aspirations, these two great trading entities on either side of the Atlantic will, of necessity, constitute the hard core of strength with which the free world must defend its freedom.

The degree of interdependence between the great economies flanking the Atlantic has been demonstrated repeatedly in recent years. Imbalances within the trade or payments arrangements among the major economically advanced nations can create serious problems.

Our own troubling and persistent balance-of-payments deficit is in a very real sense the mirror image of surpluses in the accounts of certain of our European friends. To minimize these imbalances a high degree of coordination of domestic economic policies is required-coordination that is already being undertaken through consultation in the OECD which came into being last September. We are also seeking through the Development Assistance Committee of the OECD, to coordinate national programs of aid to less developed countries.

The extent of the interdependence of the United States and Europe goes further still. Effective plans for the stabilization of the market of a manufactured product such as textiles or the market of some raw material such as coffee are impossible without the cooperation of both of these two major trading areas. Indeed, any major economic program involving the world's markets demands the close cooperation of Europe and the United States. As a result the United States finds itself engaged in consulting with its European partners almost continuously on a widening area of economic problems.

The growing strength and cohesion of the European Economic Community are laying the foundation for a much more effective Atlantic partnership. We have long felt the need for a Europe strong and united that could serve as an equal partner committed to the same basic values and objectives as all America. We can foresee that possibility for the first time as the European Economic Community begins to speak with a single voice not only on problems of commercial policy but on an increasing number of economic subjects.

Yet, it may be asked, granting that a more effective Atlantic partnership can contribute to the increased strength and cohesion of the free world, how will it affect the trading interests of the United States?

There are several answers.

For many reasons the European Common Market, as it is developing, will provide an unparalleled opportunity for the sale of our products. Our trade with the nations of an expanded Community is today very much in our favor. Our exports of all products to that area are 50 percent higher than our imports. Most Europeans are only just beginning to enjoy many of the consumer goods that Americans have known for years-automobiles, electric refrigerators, air-conditioning. Using automobile ownership as an index, one may say that the European market is about at the level of consumer demand which existed in the United States in the late twenties-and think of the expansion that has taken place in our markets since that day.

A great mass of Europeans are just beginning to expand their horizons, to catch the vision of the more ample life. Their demands are increasing explosively. Europe is undergoing a revolution of rising

expectations quite as profound as that which is sweeping the less-developed countries but, of course, on a higher plane.

V

Not only does the European market offer an almost unlimited potential for growth, but it is the kind of market best suited for American production. European industrialists have been accustomed to selling their products in small narrow national markets. They have built their industrial plants with that in mind.

Saare We alone in the free world have fully developed the techniques of ma mass production, for we alone have had a great mass market open to production us. If American industry has the will and energy, and if access to the Common Market can be assured to it through the tools provided by the Trade Expansion Act, it should find in Europe new trading opportunities of a kind not dreamed of a few years ago.

Of course, the development of the European market for American products will not be easy. It will make heavy demands on our imagination and ingenuity. It will require a considerable effort of merchandising of a kind few American firms have ever attempted in Europe, because in the past the potential of limited national markets has never seemed to justify the trouble. It will require us to do much more than merely ship abroad the surplus of the goods we produce for Americans. It will mean much greater attention to the tailoring of products designed expressly for European tastes or European conditions.

This need is already being recognized. For example, I noted last week a leading business publication reviewed the plans of one of America's automobile manufacturers to produce a universal car for sale anywhere in the world. At least 60 percent of the oversea demand, the article noted, was for a very small car designed for buyers who were moving up the scale from bicycles and motor scooters. An official of the automobile firm was quoted as saying:

Ninety-three percent of vehicles made in the United States are not suitable (e) for oversea consumption.

X

So change is in the wind. There is no reason why American industry should not continue to display the vitality and creativeness that have stamped its performance in the past. Industrial research in the United States continues at a level many times higher than that JS, of Europe. Each year American industry creates new products and h processes responding to the high living standards of our people and best creating in turn the improved production techniques that will push those living standards higher still.

Our machinery industries, generating a continuous stream of new inventions for export to the world, are the acknowledged leaders of mass-production systems. Our synthetic chemicals products continue to provide most of the major advances in the world's new synthetic products—so much so that half or more of the sales of some of our leading producers consist of items that did not exist 10 years ago. We are a creative nation, and there is every reason to suppose that we shall remain so. If we can turn this creative genius to use in this new and promising mass market of Europe the gains for the American economy can be prodigious.

VI

But if American producers are to have a fair chance at the great trading opportunities provided by this new mass market we cannot afford to delay. We must be able to assure them of access to that market as soon as possible.

There are several reasons why prompt action is imperative.

First, the enactment of the Trade Expansion Act at this session can have a major effect on developments within the Common Market itself. There are as many shades of opinion in Europe as in the United States. Within the European Economic Community there are strong pressures for the adoption of a liberal commercial policy and for an outward-looking posture toward the world. But there are also pressures for keeping the common external tariff high and for

TSA protecting agriculture excessively.

By enacting the Trade Expansion Act we will make a strong declaration not only of our intention but our ability to work toward a world of expanding trade. We will strengthen those forces in Europe that are seeking to liberalize the Common Market's trading policies.

For its effect on the Common Market's agricultural problems, which I shall point out in a moment, prompt action is particularly important in view of the pending negotiations for the accession of the United Kingdom to the Common Market. That negotation is complex. It affects trading arrangements not merely with the British Commonwealth, which is spread over six continents around the world, but also with the other European nations that have been united with Great Britain in a Free Trade Association.

There are various formulas that can be devised for the solution of these intricate problems. Some would be advantageous to U.S. trading interests; others severely disadvantageous. Since the President first announced his intention to submit the Trade Expansion Act to the Congress some of the nations participating in the negotiations have already seen in the Trade Expansion Act the instrumentality whereby many of the problems involved in the current negotiations can be rendered easier of solution-and in a manner that will avoid discrimination against, or disadvantage to, not only the United States but also other nonmember trading nations, including our friends in Latin America.

There is a second important reason why the prompt enactment of the Trade Expansion Act is necessary. There has never been a time in recent history when the trading needs of Europe and the United States have been more nearly complementary. Today, Europe needs our imports and we need to provide the goods it can use. For today, Europe's economy is strained to its limits; capital is scarce; executive manpower is lacking; overemployment exists in many areas. America, on the other hand, has idle facilities and pockets of unemployment. It would be an act of economic statesmanship if, by agreement between ourselves and the Common Market, we could promptly find a basis for achieving a greater flow of goods to Europe.

soon

While such an arrangement must, of course, be reciprocal in form, Europe is unlikely for a number of years to have large export sur