In your study of transatlantic economic relations in the 1950s–1970s you use the specific case of the Belgian grocer Delhaize. Why this choice?
Narratives about transatlantic economic relations, especially in the postwar period, have tended to focus on the influx of American investment into Europe and the challenge it posed to European firms. Up to now, my own research has examined the ways these European companies responded to foreign competition, especially from American multinationals. While working on the business strategies of European food distributors in the 1970s, though, I uncovered investment flows crossing the Atlantic in the other direction: from Europe to the US. The Belgian grocer Delhaize was one of the first European firms from its sector to invest heavily in the US in this period. It was the timing of this investment that surprised me most. After US President Nixon and his Secretary of State Henry Kissinger declared Europe a rival in 1971 and withdrew from the Bretton Woods agreement, the postwar system of international trade faltered. The oil crisis of 1973 only exacerbated the ensuing macroeconomic recession. But amid all of this, there developed an entire apparatus designed to facilitate European investment in the US, particularly in states hardest hit by the recession where unemployment was high and where public spending was low. The case of Delhaize’ acquisition of US grocery chains and distribution networks beginning in the 1970s offers an excellent lens into the larger issues around international trade relations and the macroeconomic business environment for firms on both sides of the Atlantic.
What does re-visiting the notion of the “American challenge” tell us about the context of transatlantic economic relations?
Jean-Jacques Servan-Schreiber’s Le défi américain looms large over postwar international relations historiography. His arguments about American investment posing an existential threat to Europe have undergirded not only IR scholarship, but also scholarship on European integration, since he argued that only through further cooperation and interdependence could Europe survive. But his analysis also inspired many efforts to quantify exactly how much of an economic threat American investment posed. Two particular aspects of my findings about European investment in the US in the 1970s demanded a further revisiting of the notion of the “American challenge”: first, that domestic regulations in Western Europe restricted business growth and motivated European companies like Delhaize to invest in the US, and second, that while the American federal government may have adopted a more offensive position toward Europe, individual state governments were actively seeking European business investment. Certainly, the world of 1971 (when the first Council of American States in Europe, or CASE, office opened in Brussels) and 1974 (when Delhaize made its first US acquisition) differed greatly from that of Servan-Schreiber’s perspective in 1967. Yet, changes in patterns of foreign investment flows over such a short period of time call into question whether the “American challenge” was already waning before Servan-Schreiber even penned his famous text.
You talk about the debates on “American aid” versus “American trade”. How did they influence the relationship between trade and international relations?
The language of “American aid” vs. “American trade,” also used by Charles Kindleberger, originally appeared in documents from the US Economic Cooperation Administration, which was tasked with administering the European Recovery Program (or Marshall Plan), and the US Department of State. In many ways, the debates over “aid vs. trade” characterised the tensions in American foreign policy approaches to Europe – indeed, to much of the world – following the Second World War and continuing into the 1970s. The US ideological war against communism played a significant role in shaping its foreign policy during this period and bridged the gap between “aid” and “trade”. Building up European (and Asian) capitalism became a grand strategy of communist containment and was implemented not only through technical assistance programmes, but also through trade agreements.
How did the changes in US foreign and monetary policies during the 1970s impact European integration – and the larger global economy?
In the aftermath of the Second World War, the US government saw rebuilding Europe as a strategic priority and conditioned Marshall aid funding for reconstruction on cooperation among the Western European nation states as a means of stabilising the region, which was a key American trading partner. It was during the Marshall Plan’s implementation that six countries (France, Italy, the Benelux states, and West Germany) agreed to the Treaty of Paris in 1951 and formed the European Coal and Steel Community, a precursor to the further steps toward integration taken in 1957 with the Treaty of Rome. American foreign policy thus became one of the forces for early postwar integration. Transatlantic trade relationships became more complicated in the years that followed, as Europe and the US engaged in fierce economic competition. But even this tension was a boon to integration more than an impediment. In fact, it was global competition – first with American and then with Japanese firms – that propelled the integration process forward in the early 1980s and provided the impetus to relaunch the European Single Market. Throughout the process of market integration, European policymakers constantly referenced American regulations and sought to maintain conditions that facilitated transatlantic trade but favoured European firms. But that’s a story for another of my articles forthcoming this year!
Can your article help highlight current trade policies and debates, from an IR perspective?
While it is important that we attend to the unique contexts and contingencies of the past, history also provides valuable perspective for understanding the present. The story of Delhaize’s investment in the US in the 1970s sheds light on the ways firms respond to pressures in their business environment and how companies interact with institutions and systems of governance. Facing growth constraints and restrictive regulations at home, for example, Delhaize seized upon an opportunity to grow its business in a foreign market, an unintended consequence, perhaps, of the domestic government’s efforts to support small business amid an economic downturn. The American firm Food Town used the opportunity of a foreign acquisition to capitalise its surging growth and pioneer a new model of food retail that prevails over low- and middle-income American shopping still today. From the recent controversy over Huawei’s 5G networks and the Volkswagen “Dieselgate” scandal to the efforts to boost and effectively regulate foreign investment in Africa and Southeast Asia, business – and trade more broadly – continues to be at the centre of many foreign policy strategies and international relations debates, and businesses, for their part, pay close attention to the macroeconomic and geopolitical environments in which they operate.
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Full citation of the article:
Ballor, Grace. “Du ‘défi américain’ à l’expansion européenne: les relations économiques transatlantiques des années 1950 aux années 1970.” Relations internationales 180, no. 4 (2019): 43–57. doi:10.3917/ri.180.0043.
More information on the journal Relations internationales here.
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Interview by Aditya Kiran Kakati, doctor in International History and Anthropology and Sociology; edited by Nathalie Tanner, Research Office.
Banner picture: excerpt from an image by Olga Popova/Shutterstock.com.