Jawaharlal Nehru and the European Economic Community

Initial Indian Perceptions

Shortly before the signing of the Treaty of Rome, Britain proposed an industrial free trade area (including the EEC as one of its members) within the Organization for European Economic Cooperation (OEEC). This proposal envisaged the removal of tariff and quota restrictions on industrial goods, but excluded agriculture and left to the individual members the discretion to adopt their independent trade and commerce policies towards non-member states. India had no reservations about the British proposal as it was not likely to impinge on Commonwealth exports (Ray 1961). When the negotiations terminated in November 1958 after French objections, Britain established the European Free Trade Area to ‘avenge her humiliation’ (Chopra 1964a, 58; 1964b, 58).

The European Coal and Steel Community (ECSC) was perceived by a major Indian daily as over-ambitious while the surrender of national sovereignty was likely to prove unpopular among the people of Western Europe. The ‘idealistic’ Schuman Plan was termed as nothing more than ‘a French attempt to deny Germany the economic independence which would have provided France with severe competition’ (The Times of India, editorial, 20 September 1952).

Until Britain announced its decision to seek membership of the Community in July 1961, the degree of Indian interest in the European experiment was ‘relatively slight’ (Gowda 1962, 130). New Delhi neither displayed ‘great interest’ nor made any ‘clear cut’ official announcement on the Common Market (Ramkumar 1964, 64). All attempts at European unification were said to have been ‘remote from the concerns of India, or of Asia’; whatever reactions Delhi had towards the Community were ‘not very favourable’ (Kumar 1966, 52). The initial Indian attitude towards the EEC was said to be generally one of ‘indifference’ (Gupta 1971, 507), of ‘coldness’, or ‘luke-warmness, tinged with a certain amount of suspicion’ (Bhoothalingam 1972, 7). There seemed to be a ‘contemporary absence’ of deep knowledge in India about the issues regarding British membership of the EEC (Heimsath and Mansingh 1971, 47).

In the early years of independence, Nehru regarded the movement for European unification as a natural response to problems peculiar to Europe and to its ‘legacy of conflict’ (Nehru 8 March 1949), but tainted by colonialism. The Government of India took a keen interest in the Common Market from the moment it was first formed, largely because of trade concerns even though there was meagre trade with the West Europe countries in 1957. ² New Delhi’s interest in European integration, according to a former minister, was as old as the first beginnings of the movement towards an economically and politically united Europe. The European integration movement was perceived as ‘the quickest means’ and an attempt by countries with different languages and histories to forge ‘a common programme for collective and rapid prosperity’ (Mishra 1973). European integration, according to the first Indian Ambassador to the EEC, coincided with the ‘same experiment and experience’ which began in India in the 1950s when successive plans for socio-economic development were launched and implemented (Lall 1984, ix). The Common Market, according to another former Indian ambassador to the EEC, was ‘a politically motivated initiative’ whose ‘ultimate objective was political conciliation and reconciliation and a co-operative political modus vivendi’ (Swaminathan 1973, 29–30). Indian attitudes thus reflected ‘the fear of the unknown’ as well as hope that as the Community became economically strong and powerful, it would not grow into ‘a self-centred inward-looking economic giant’ (Swaminathan 1973, 30).

For India’s first prime minister, there was bound to be ‘a movement towards a closer economic and perhaps political association of groups of countries’. Western Europe, Nehru felt, would ‘inevitably’ be driven in the direction of the establishment of a Common Market. Some Asian countries, he feared, might be apprehensive that ‘a powerful European or Atlantic Union might hinder their own development and delay the independence of some European colonial territories’ (Nehru 4 February 1957, 467, 22 February 1957, 553).

Nehru and the Treaty of Rome

A month before the Treaty of Rome was signed, Nehru noted that ‘some kind of an economic union’ was developing in Western Europe, excluding the United Kingdom. While many people in France, Italy, Belgium and Holland, he felt, tended to welcome ‘a closer union’, Germany did not seem to be ‘so keen’ since it could hinder German reunification (Nehru 22 February 1957, 553). There was, he opined, ‘no future for Western Europe except in some form of a union, whatever that form may take’. But he had his reservations about just how rapid the process would be since both Germany and the United Kingdom would pose ‘more difficulties’. Future developments, he maintained, would be contingent on the avoidance of war and that any European Union was ‘bound to be dominated by Germany’ (Nehru 4 February 1957, 467).

Nehru was not quite sure of the exact implications of the Rome Treaty, but there were three aspects which ‘perhaps might lead to undesirable consequences’ (Nehru 22 June 1957, 9 July 1957, 669). First, as a champion of anti-colonialism, his key concern was that European integration might ‘imply the economic exploitation of associated territories’, which could also pose ‘an obstacle’ to their achievement of political independence (Nehru 3 July 1957, 632). Thus, in the UN Trusteeship Council, India was keen to ensure that the economic interests and resources of the Trust Territory of Ruanda-Urundi were not ‘mortgaged to outside interests’ by its association with the Common Market (Jha 1959, 154; Rao 1959, 408). Second, Nehru wondered how the establishment of the Common Market would affect India’s bilateral arrangements and the treaties under the General Agreement on Tariffs and Trade (GATT), but he regarded this as ‘a technical matter’ (Nehru 9 July 1957, 669). Third, Nehru did not consider it desirable if economic cooperation became part of a ‘military approach’. All kinds of difficulties could arise since economic aid tended to be ‘coloured by military factors’ in many parts of the world (Nehru 22 June 1957, 10 July 1957).

With regard to the ‘Rome Treaty business’, Nehru felt that it could be considered preliminary to ‘some kind of political coming together’ (Nehru 13 June 1962) and as ‘a first step’ in the direction of some measure of growing political solidarity among its members. The general feeling about the Treaty of Rome was that it was essentially a charter of eventual political integration whose main compulsions were political, not economic.

GATT Review of the Treaty of Rome

Even though India was one of the 23 original Contracting Parties of GATT, it had an ambivalent attitude towards it and criticised it for being unfair, unbalanced and prejudicial to the interests of the developing countries. New Delhi often led developing countries in various multilateral trade negotiations under its auspices. In the early rounds of GATT, the developing countries were excluded from participation in tariff negotiations at the instance of the United States and the European Economic Community (Ismail 2008, 2, 4).

While the formation of common markets had been tentatively accepted in principle by the Contracting Parties to the GATT, India felt that the consistency of the provisions of Treaty of Rome, especially the most-favoured nation principle, was a matter of further examination (Krishnamachari 1957, 155–156). The implications of the association of overseas territories, Nehru stated, should receive ‘the most careful examination’ in the GATT. All Commonwealth countries, he urged, should adopt ‘a common approach’ towards the GATT discussions of this issue (Nehru 3 July 1957, 633). He asked the Finance Ministry to keep him informed of what form the Rome Treaty would come up in GATT and how voting was likely to take place (Nehru 24 September 1957).

When the Rome Treaty was being discussed in the GATT Intersessional Committee, the Indian representative expressed ‘firm’ opposition to the association of the overseas territories with the Common Market since the creation of preferential trade blocs for one under-developed area was likely to create serious problems for others (Swaminathan 1957a, 14, 1957b). The establishment of the Community should be welcomed, he added, provided that there were ‘reasonable guarantees’ that the EEC would pursue policies which would contribute to the expansion of global trade and not merely that of the Member States (Swaminathan 1957a, 13–14). India was against the creation of preferential blocs and considered it undesirable to link economic assistance with political dependency (Statement by the Indian representative, 30 October 1957. Times of India, 1 November 1957). India could not ‘contemplate with equanimity the loss of any trading opportunities’ because as a developing country it faced the ‘most intense’ balance-of-payments difficulties with non-sterling countries involved in the Common Market arrangements. These difficulties would be further accentuated if, as ‘a result of economic groupings, monopolistic tendencies’ and the cost of capital goods and industrial materials increased (Swaminathan 1957a, 14). New Delhi also expressed ‘misgivings’ about the provisions permitting Member States to fix minimum prices for agricultural products. The association of overseas territories, the Indian representative argued, was not compatible with the existing provisions of GATT as it would be tantamount to ‘the creation of a new area of preference’ (Swaminathan 1957a, 13–14).

While India, Nehru maintained, could not resile from its position on the Rome Treaty, but he was pragmatic enough to also point out that he did not deem it necessary ‘to go about doing propaganda against it’. There was ‘no question of total opposition, but the question of overseas territories is an important one and we cannot allow that to pass without making our position perfectly clear’ (Nehru 24 September 1957).

The GATT Working Group was unable to reach a clear-cut conclusion regarding the consistency of the Treaty of Rome with Article XXIV of GATT. On the assurance of the Six that they would seek to refrain from developments harmful to countries outside the Community, India refrained from pressing its general objections to the Treaty of Rome. Like other developing countries, it began to look for multilateral remedies to overcome the adverse impact on exports as a result of the emergence of the EEC.

Early Contacts with the Community

The first direct contacts with the European Economic Commission was made in November 1959 when the ‘Commissioner-General for Economic Affairs’ ³ K.B. Lall led an eight-member delegation on a five-week visit to explore possibilities of increasing exports and negotiate trade agreements with some of the EEC Member States. The delegation ‘incidentally’ met the authorities of the Common Market, called on Commissioner for External Relations John Rey, and had informal discussions about tariff reductions (Kanungo 1960). The delegation was politely assured that the Commission would give ‘special consideration’ to Indian difficulties in the interest of promoting a healthier economic relationship between India and the EEC. A concrete proposal was reportedly to be made to the European Coal and Steel Community to export iron ore from Bellary District, Mysore (The Times of India 3 November 1959).

Key Concerns

Since political association generally followed economic collaboration, Nehru was concerned that this might lead to rivalries and conflicts in many regions, especially Africa. Sudden financial upsets, Nehru told the visiting British Minister for Aviation Peter Thorneycroft, would inevitably lead to the redrawing of and delays in development plans as well as uncertainties like timely repayment of credits (The Hindu 13 July 1961; The Times 15 July 1961, 7). Nehru was critical of the move to ‘hitch’ the primary producers of Africa and Asia to the European Community. This, he said, smacked of an attempt ‘to revive Western economic imperialism in a new garb’. Without the United Kingdom, the economic cohesion and unity of the Commonwealth, he feared, would be ‘gravely impaired’ (The Times of India 26 July 1961). ‘Serious damage’, Indian interlocutors told the visiting British minister, was likely to be caused to Indian exports on British accession to the EEC without special measures and adequate safeguards. The British minister assured his hosts that Indian interests would be ‘kept fully in mind’ in any negotiations for British entry into the Common Market, which was left to the British government (Joint statement on Thorneycroft’s visit, 14 July 1961, in Foreign Affairs Record, July 1961, 207–208).

Indian worries about eventual British membership of the EEC were two-fold. First, Indian exports of manufactured goods and primary products like tea were likely to be displaced by European products as well as ‘associate’ territories in Britain—India’s key market. Second, the question of British entry also came in the midst of an acute foreign exchange crisis and huge trade deficits, ⁴ which had to be financed by large-scale withdrawals from the foreign exchange reserves accumulated during the Second World War and foreign aid. Stringent import controls had also to be imposed which, by reducing imports to the bare essentials, had created a widespread under-utilisation of the available industrial capacity (M. Singh 1963, 266). India’s recurring foreign exchange problems were, among others, the result of constantly growing requirements of capital goods and industrial raw materials, uncertain foreign aid, repayment obligations, and failure to diversity export markets as well as its export basket.

Britain Applies for EEC Membership

India regarded the British decision (31 July 1961) to apply for EEC membership as both a threat and an opportunity to diversify trade away from its over-dependence on Britain. Being accustomed to Imperial Preferences, India, like other Commonwealth countries, had neglected to search for other non-Commonwealth markets.

Three days after Britain made a formal application for Common Market membership, Finance Minister Morarji Desai expressed deep concern about the ‘possible setback’ to its export trade, since India would lose the Imperial Preferences and continue to run a heavy adverse imbalance with the Six since almost all exports were subject to fairly high tariffs and other taxes in the Community (Desai 11 August 1961; Foreign Affairs Record August 1961, 209–211). Indian efforts to increase exports to the Common Market, he argued, could not succeed without a substantial liberalization of EEC tariff and commercial policies. Suitable transitional arrangements, he hoped, would be made so that preferential benefits would cease gradually (Desai 11 August 1961; The Times 12 August 1961, 5). Reiterating dislike for ‘all groups’ being formed in the world, Desai asserted, because they were ‘the basis for all sorts of strife and difficulties which ultimately lead to war’ (Desai 5 September 1961). At the Commonwealth Finance Ministers’ Conference in Accra (12–13 September 1961), the Asians expressed a fear of ‘a cartelized, inward-looking Community’ (Kidron 1968, 171). They expressed ‘grave apprehension and concern’ and reservations whether the United Kingdom would really be able to protect the Commonwealth interests ‘adequately and effectively’ (Keesing’s Contemporary Archives, vol. 13, 19011).

Associate Membership

At no point of time did India seriously consider the prospect of seeking associate membership of the European Community. New Delhi, Finance Minister Desai asserted, would not touch the offer for associate status ‘even with a bargepole’ (The Times of India 14 September 1961). The British were also well aware that the Six were unlikely to offer associate status to a large developing country with British colonial ties. The Six were unwilling to offer association in any form to South Asian Commonwealth countries because of the existence of low-wage ‘powerful manufacturing industries’ and trade predominantly manufactures and semi-manufactures (European Economic Community, Commission 1963, 220). Germany objected to the association of India since its population would far outnumber the entire Community (The Times 5 December 1961, 9). Chancellor Konrad Adenauer had strong reservations. The Common Market, he insisted, ‘cannot possibly digest the whole Commonwealth without endangering itself’ (Adenauer 1962).

The Six therefore proposed to adopt a ‘decalage’ in applying the Common External Tariff (CET) so that the export outlets of these countries might be developed while ‘safeguarding the Community interests’ (European Economic Community, Commission 1963, 220). In November 1961, the Six stated that the CET must eventually apply to all non-member countries, including the Commonwealth except in cases where special arrangements had been made. Exceptions to the CET were only meant to give the Commonwealth time to adapt their economies to the new situation (European Economic Community, Commission 1963, 221–222). During a debate on the British application in January 1962, the European Parliament also recommended that the Community should make a number of ‘limited temporary concessions while assuming an uncompromising attitude as to the final objectives’ (European Economic Community, Commission 1962, 224; emphasis added).

Establishment of Diplomatic Relations

The proposal for accrediting a diplomatic mission to the Community was first mooted when an Indian delegation visited Brussels towards the end of 1959. In August 1961, India planned to open a new office in Brussels to keep in closer contact with the Common Market. Three months later, India appointed Krishna Behari Lall as India’s first Ambassador to the EEC. By January 1962, the Indian Mission (then called the ‘Indian Economic Mission’) to the Community had been established.

While presenting his credentials (2 March 1962), the Indian chef-de-Mission said he would seek to ‘contain the threat and utilize the opportunity for wider benefit’ (Lall 1984, x). The Mission’s main tasks were four-fold: (a) to develop economic relations with the EEC-6; (b) hold ‘a watching brief’ over the negotiations regarding those conditions of entry which could have an adverse impact on Indian commerce, trade and industry; (c) develop India’s bilateral economic relations with the whole of western Europe as well as represent Indian interests at both the GATT and UNCTAD (Lall 1983, 131–132); and (d) mobilise support for the Aid India Consortium (Lall 1975, 15).

Apart from economic compulsions like dwindling foreign exchange reserves, the prospect of EEC enlargement made the establishment of an institutional link imperative. Recognising the importance of the nascent Community in the struggle of the developing countries against underdevelopment and as an important potential market for exports, India was keen to improve its market access in the Community. India sought to establish ‘a new post-colonial, horizontal, multilateral relationship’ (D. Singh 1976, 444–445) with the EEC. The Community was already the world’s largest trader, the largest importer, the second largest exporter and the ‘fastest growing economic unit’ in the Western world. It had all the potential of becoming ‘one of the world’s giants’ (Lall 1984, x).

Securing Market Access

Despite British declarations to try their utmost to safeguard the interests of the Commonwealth countries, Nehru was uncertain as ‘to what extent they may be able to do so’ (Nehru 27 March 1962). India found British proposals to Common Market negotiators to be ‘most disappointing’ since they failed to provide ‘a satisfactory safeguard’ for Indian commerce (Lall 30 May 1962). Any fall in India’s exports of products heavily dependent on the British market was likely to lead to a crippling balance of payments crisis, adversely affect several lines of production in the country, and result in serious social and economic problems.

India faced a formidable challenge in gaining concessions from the Community because the idea of granting Commonwealth exporters guaranteed access to either the British or EEC market contravened the concept of preference communautaire of the Common Agricultural Policy. The Community’s rigidity over this principle was reinforced by the commercial self-interest of France and the Netherlands which, as two major agricultural exporters sought to displace, as quickly as possible, Commonwealth suppliers from their entrenched position in the British market. Thus, the ministers of the Six (22 February 1962) ruled out a permanent preferential position for Commonwealth exporters though they were willing to discover temporary measures.

The First Aide-Memoire, May 1962

As British negotiations with the EEC entered a crucial stage in May–June 1962, India became acutely concerned about the impact of the negotiations on its trading interests. In a 42-paragraph aide-memoire submitted by the Indian Mission in Brussels to the Six in May 1962 ⁵ India highlighted its foreign exchange difficulties and urged the Six to think of devising other solutions to its export problems. ⁶ The Six found these demands ‘unacceptable’. India’s problems, they were convinced, could not be solved by duty-free entry into the British market for all exports. They were however prepared to sign ‘comprehensive’ agreements after a transitional period, whose length had not yet been specified, to develop the trade of the three South Asian Commonwealth countries (India, Pakistan and Ceylon) and to satisfy their pressing need for foreign exchange. The Six had proposed that these agreements should be preceded by special arrangements during a reasonably short period (Ducci 1962, in Kamath 15 June 1962). K.B. Lall’s masterstroke was to propose that once Britain and the Community successfully concluded their negotiations, the enlarged EEC should enter into a comprehensive trade agreement with India. This proposal was eventually accepted and became a part of the entry package negotiated by Edward Heath as Leader of the British delegation.

The enlarged Community agreed to negotiate a comprehensive trade agreement by the end of 1966 with India in order to maintain and, as much as possible, increasing its foreign currency receipts. Until that date, there should be a transitional regime. India termed the declaration of intent as ‘too vague’. Any measures which would benefit Indian trade had been simply ‘left in the air’ (Lall 31 July 1962). By the spring of 1962, India had realised that it had overrated Britain’s bargaining power and that New Delhi would have to take care of its own interests. There was also some degree of discontent at the ‘discrimination’ made by the EEC whose attitude had been less firm in the case of ‘white’ Commonwealth represented by Canada, Australia and New Zealand and the ‘coloured’ Commonwealth represented by the Asian Commonwealth. India, Nehru realised, should not expect too much despite British attempts to help secure safeguards (Nehru 20 August 1962).

Commonwealth Prime Ministers’ Conference, September 1962

Even though he had been in indifferent health, Nehru, who was almost 73, attended the ten-day Commonwealth Prime Ministers’ Conference (10–19 September 1962), which was devoted largely to the question of Britain’s negotiations for membership in the EEC. On the eve of his departure for London, Nehru remarked that India was ‘one of the biggest markets’ in the world and the West would do well to cultivate trade with India in its own interests. The Six, he said, were ‘hard bargainers’ when it came to responding to Indian representations. In many respects, the Common Market negotiations had not been favourable to India. ‘But one gets used to all kinds of things one does not like,’ he said (Nehru’s remarks on arrival in London, 8 September 1962, cited in Jain 1962).

At the plenary session on 11 September, Nehru was concerned that British entry into the Community ‘might’ add to East–West tensions and reduce the prospects of disarmament. It would also reduce foreign exchange earnings and possibly lead to grave social consequences in terms of unemployment (Nehru 11 September 1962, 397–398). The proposals were based on the old ‘colonial concept. The problem, he argued, could only be solved by ‘extending duty-free treatment to as wide a list of items as possible and to lower the tariffs on the rest’. The Commonwealth, he asserted, was unlikely to survive unless ‘a radical change’ was made in the existing proposals (Nehru 11 September 1962, 399).

On 17 September, Nehru endorsed the proposal by Canadian Premier John Difenbaker for the need for a world trade conference. This, he added, was a plea for replacing the present laissez-faire markets by a world-wide managed market. It would be dangerous if the Community’s purpose was only to become a powerful combination of rich and developed countries at the cost of the Commonwealth. The widening of the existing gap between rich and poor nations, he stated, would have a deplorable effect on world peace and lead to new tensions. The formation of the EEC had helped resolve conflicts between France and Germany, but this should not ‘promote conflicts with other countries’ (cited in Jain 1962b).

The whole purpose of including a paragraph on Asian points of criticism of British negotiations with the Community in the final communiqué issued at the end of the Commonwealth Prime Ministers’ Conference was to indicate that negotiations on these points ought to be reopened. This, Nehru clarified, did not imply any attempt to change the basis of the Brussels agreements of concluding comprehensive trade agreements with India, Pakistan and Ceylon, but improvement in details (Nehru 20 September 1962).

At the Commonwealth Prime Ministers’ Conference, Nehru was not in the best of health and he was unable to apply his mind to the details of the points at issue. K.B. Lall, the Indian ambassador in Brussels, was a bit worried and impatient when Nehru spoke eloquently about the configuration of world politics and its impact on the Community’s enlargement. As Nehru ‘rambled on’, Lall was worried that ‘too much time was being taken on a subject with which his other colleagues were not at that moment too deeply concerned.’ Nehru’s statement, Ambassador Lall recounts, reflected

…how broad a grasp he had, what a balance view he had, how moderately, how convincingly he put it forward, respecting the British right to take their own decision and yet bringing to the notice of the British Government and the fellow prime ministers from other states of the Commonwealth, the implications of the decision in terms of the Commonwealth, in terms of individual countries of what Britain was intending to. (Lall 1983, 138–139)

Nehru and De Gaulle

After the London Commonwealth Prime Ministers’ Conference, Nehru met President De Gaulle on 22 September 1962 in Paris in order to persuade him to appreciate India’s point of view on the need to take a sympathetic approach towards India’s difficulties. De Gaulle, however, was not too reassuring about Nehru’s overtures: ‘Quite a long period (perhaps two years) will elapse before the negotiations will lead to some arrangements’ (cited in Vaisse 1997, 59). For the General, Britain’s entry into the Common Market on its own terms, namely, accommodating the needs of the Commonwealth and EFTA along with its own interests would have been tantamount to the ‘submergence’ of the European Community into the British Commonwealth (Chopra 1964b, 96).

Collapse of Talks and the Aftermath

British negotiations with the Six continued for more than 18 months before they finally collapsed on 29 January 1963. India and the Commonwealth countries had ‘every reason to thank God and de Gaulle’ (The Times of India, editorial, 5 February 1963). The announcement had created ‘a difficult situation’ in Western Europe (Nehru 2 February 1963). The veto was firmly related to the French view that the UK was not ready to weaken its Commonwealth links and commit itself to full membership obligations (K.B. Lall’s written communication, 25 March 1996, in Wilkes 1997, 213–256). Though Commission President Walter Hallstein maintained that the proposal for a trade agreement with India stood unvitiated by the French veto (Address to the European Parliament after the French veto, 6 February 1963 in The Hindustan Times, 7 February 1963), he subsequently was less optimistic and expressed the hope that ‘some at least of the measures during the British negotiations may still be able to bear fruit’ (Hallstein 1963).

Despite recognition that India’s problems needed to be resolved, India’s intense probing and lobbying within the Community made little headway. The Six were too deeply immersed in their own internal squabbles to be either concerned or willing to give thought to India’s difficulties. India’s problems had lost their urgency now that the question of Britain’s entry into the Common Market had itself been put off indefinitely.

Amongst the EEC institutions, ‘leading elements’ in the Commission, largely because of constant nudging by the Indian Mission in Brussels, endeavoured to secure at least some of the constructive solutions agreed upon by negotiators for the enlarged Community were applied without much delay to India’s trading relations with the Six. The European Parliament unanimously resolved to invite the Commission to pursue and intensify contacts with the Indian representative with a view to preparing for meaningful bilateral negotiations. However, the Council of Ministers could not be ‘induced to make up its mind on opening bilateral negotiations with India’ (Lall 1984, xiv).

Indian Aide-Memoire, April 1963

Following the failure of the negotiations with the United Kingdom, India continued to press the Community to open concrete bilateral talks for a commercial cooperation agreement. India continued to intensely probe the EEC institutions for favourable consideration of its requests, but it was making little headway. On 23 April 1963, India submitted an aide-memoire to the Commission which urged that given its high trade deficits, the Community should ‘step by step’ adopt and implement practical measures for tariff reductions/suspensions, lifting of quantity restrictions, without awaiting the conclusion of an agreement. It also sought a joint study for long-term markets for certain Indian exports like manganese ore, help in merchandising Indian products and action to promote cooperation between Indian and European industries (Europe Agence Internationale, Daily Bulletin, 31 August 1963). Although the Commission’s report on the Indian aide-memoire and its request for a mandate to hold exploratory talks were both before the Council, discussion was confined to the procedural aspect of the problem only. The proposals spoke of ‘exploratory talks’ rather than negotiations and of a ‘commercial arrangement’ rather than a trade agreement (Subhan 1963, 237–238). Several Member States had reservations on granting unilateral reductions or suspensions, for example, Belgium for carpets, Italy for East India Kips, etc. Such authorisation was not likely to be given soon because the Council of Ministers had not yet had a debate on the fundamental issues relating to the contents and objectives of the envisaged talks. Member States tended to prefer the solution proposed by India, namely, the granting of certain immediate unilateral concessions by the EEC outside of bilateral negotiations.

Between January 1964 and December 1965, intensive lobbying eventually led to the suspension autonomously the whole or part of the customs duty leviable on 11 important Indian export products (including tea, cashew, pepper, cardamoms, ginger, shellac), which were extended from year to year. ⁷ In accordance with the Council decisions of 18 June and 3 December 1963, the Six also agreed to provide zero-duty tariff quotas for handloom fabrics and handicrafts. On India agreeing to limit its export of jute and coir products to agreed figures, the Six agreed to suspend their tariff partially in regard to these commodities. Subsequently, another self-restraint agreement on cotton textiles was concluded. Partial suspension of tariffs (for example, on heavy jute goods and bags) was possible until completion of the trade agreements largely because each of them was of special interest to one or the other Member State which prevented their collectively reducing the tariff. These customs concessions and tariff quotas nearly doubled Indian exports to the Community from ₹ 606 million in 1963–1964 to around ₹ 1200 million in 1971–1972 (Lall 1984, xv).

Conclusion

A key factor in Nehru’s thinking towards the European Community was anti-colonialism as three colonial powers, namely, Belgium, France and the Netherlands, were members of the EEC though India only confronted Portugal directly. India had been proactive in urging the liberation of European colonies in Africa in various fora, including UN committees and was critical of French policy in Indochina and North Africa. Association with the Community was likely to lead to the continuation of colonial exploitation by other means. Suspicions were reinforced by the establishment of a European Investment Fund by the Community and talk of a common ‘Euroafrican’ policy.

Nehru’s suspicions of the European Community seem to have been partially influenced by his perceptions of the North Atlantic Treaty Organization (NATO) since the EEC-6 were also its members. He initially perceived it to be a ‘justifiable reaction’, but subsequently felt that it could enhance Cold War tensions and provide ‘a protective cover’ to former European colonies (Gopal 1979, 240; Nehru 29 September 1954). He became more critical of NATO when it threatened to come to the rescue of Portuguese colonial rule in Goa. Krishna Menon too regarded the Common Market as a kind of political alliance that emerged from NATO (cited in Brecher 1968, 30).

Despite these concerns about the Community, India did not really press its political criticism since its interests in the Community were essentially economic, not political. Nehru, who had attended every single Commonwealth Prime Ministers’ meeting between 1948 and 1962, felt that British links with the Commonwealth would be weakened and not dealt ‘a death blow’ in the event of British membership of the Community (Nehru 13 June 1962). Nehru was generally optimistic about the prospects of the EEC. Apart from its enhanced global bargaining capabilities, he also felt that a united Europe might ‘preserve some balance’ between the two super powers (Nehru 26 November 1957).

During the Nehru era, a major dimension of India’s policy towards the EEC was in the broader context of North–South relations. In the early years, EC developmental concerns were dictated by its political priorities, which because of French insistence focused primarily on Francophone countries. Nehru rued that in all this thinking in Europe, Asia hardly came into the picture (Nehru 26 November 1957). The idea of a Generalised Scheme of Preferences in favour of products from the developing countries, according to India’s first ambassador to the EEC, was initially put forward by Nehru at the Commonwealth Prime Ministers’ Conference in London. This however took practical shape in 1968 when UNCTAD II held in New Delhi accorded its approval in principle (Lall 1976, 203). This reflected his firm conviction that ‘trade is much better than aid’ (Nehru 10 July 1962, 505). Nehru was apprehensive that if the Common Market became an inward-looking regional grouping and transformed itself into a rich man’s club, the gap between the developed and developing countries would become wider. This was a concern shared by his daughter, Prime Minister Indira Gandhi (Gandhi 1973, 4).

After the establishment of the Common Market, India did not envisage the establishment of a Common Market in Asia along the lines of the customs and tariff union in Western Europe (Chandra 12 September 1958). Nehru was also greatly impressed by Franco-German reconciliation. He referred to the goal of an Indo–Pakistan confederation: ‘Confederation remains our ultimate goal. Look at Europe, at the Common Market. This is the urge everywhere. There are no two peoples anywhere nearer than those of India and Pakistan, though if say it, they are alarmed and think we want to swallow them’ (Nehru’s interview, The Washington Post, 19 December 1962, in Harrison 1971, 17). A couple of days later, the Prime Minister’s Office clarified that Nehru ‘had not offered [a] confederation with Pakistan, although some kind of link could be considered’ (cited in Arpi n.d., 6).

Although the Community was responsible for the commercial policies of Member States, it was not equipped with the necessary tools to deal with the trade problems of the developing world until the early 1970s. During the Nehru era, Indian attempts to secure a viable trade arrangement to resolve its chronic and growing trade deficits with the Six proved elusive. Amongst EEC institutions, the Commission generally gave the Indians a sympathetic hearing, but was powerless to act without the support of the Council of Ministers. India’s relations with the European Community remained low key and South Asia remained a region of peripheral interest.