The anniversary of the end of World War II in Europe is always a somber affair in Germany, and in Europe generally. Yet few consider the end of the war in terms of trade.
It is always interesting to consider what, if anything, political leaders learn from their experiences. In the case of World War II, several key figures had witnessed the economic and political consequences of the protectionist policies of the 1920s and 1930s — in particular Franklin D. Roosevelt, Winston Churchill, and Robert Schuman, the “Father of Europe.” Schuman, who was French foreign minister after the war, proposed the creation of the European Coal and Steel Community (ECSC) — the antecedent of the European Union — on May 9, 1950, “Europe Day.” The goal of the ECSC was to foster fair trade within a common market under agreed-upon rules, as a means of avoiding war in the future. This “capitalist peace theory” of free trade within a rules-based structure would become the underpinning of the EU.
Although the United States was not party to what would become the Treaty of Paris in 1951, Presidents Roosevelt and Harry S. Truman, U.S. Secretary of War Henry L. Stimson, and High Commissioner for Occupied Germany John Jay McCloy all either supported free trade and low tariffs or, at the least, opposed cartelization and protectionism.
The lesson these leaders took from observing the global economy of the 1930s was that protectionism through high tariffs led to uncompetitive, exclusive trade blocs, tariff retaliation, and currency volatility — as well as economic and political nationalism. The end of the war in May 1945, and the planning for the rebuilding of Europe, gave American and European leaders the opportunity to develop their ideas of peace through trade into what would eventually become both the EU and the World Trade Organization.
Today, the leaders of the EU are working to revitalize the rules-based order of the WTO through the EU’s negotiation of free trade agreements with the Mercosur countries, India, Malaysia, and Indonesia. As with Robert Schuman and the creation of the ECSC, the EU seeks to foster productive economic and diplomatic relations through free trade within a negotiated, rules-based framework.