The Financial System Of European Community In Its Early Stage

EC（European Community）was initiated under a overall situationdirected by Cold War and the global modernization. As a supranationalregional alliance, EC was established through plentiful negotiations by itsmember states in order to be free of U.S-Soviet hegemony and gain somedevelopment space. ECSC(European Coal and Steel Community),EURATOM(European Atomic Energy Community) and EEC(EuropeanEconomic Community) are three main elements of the earlier EC, amongwhich EEC obtained greater opportunities due to urgent needs foreconomic development after World War Ⅱ. By possessing a “privatefinancial resources”, EEC have had a notable effect on the economictrade and cooperation within the community. Besides, EEC managed toexpand its functions in both depth and width: the foundation of financialsource shifted from apportionment to tax charge, while the budget systemwas improved with an independent general accounting office establishedfor audit of financial budget and execution.The two fundamental tasks for EEC are founding a customs union andapplying CAP(Common Agricultural Policy). Its financial resource arecomprised by custom duties, imported agricultural variable levies andsome value added taxes. By removing internal customs barriers and setting uniform tariffs, EEC played a positive role in promoting the tradeflows among the member states. The imported agricultural variable leviesensured the agriculture of community being safe against the impact ofcheaper products from international markets, thus it hopefullystrengthened the agriculture competitiveness of EC. Value added taxcould serve as a valuable tool to fix the problem of insufficient financialexpenditure, which had contributed to realize a closer relationshipbetween the member states through a supranational financial system.The purpose of the Common Agricultural Policy is to reorganizethe agriculture institutes in under-developed regions and boost theincomes of the farmers. Since its application in1962, the CommonAgricultural Policy has facilitate an abundant investment in theagriculture of the state members by means of price regulation andagricultural subsidy. Those measures helped to improve the agricultureproduction in Europe, yet they also became a heavy burden for EC’sfinancial system, posing a threat to other tasks of EC and hindering theaccomplishment of its expected goals.The defects of Common Agricultural Policy have imposed seriousrestrictions for further development of EC. With negotiations undergoingbetween states members, it is widely accepted that the reform of agriculture policy and financial system are reliable solutions to theproblems of EC. Other steps include adjusting the ratio of commonagriculture foundations in financial expenditure, optimizing structuralallowance and replacing Common Agricultural Policy with marketingapproaches. As for the source of fund that are necessary for the expandingof EC, history has seen a successful sovereignty demise by a controversyof nationalism and supranationalism issues, through which a better futureof EC can be recognized in a certain sense.