European UnionEuropean Union
ByBy
Flora WangFlora Wang
Travis PierceTravis Pierce
European UnionEuropean Union
The most integrated economy todayThe most integrated economy todayFounded upon numerous treaties and has Founded upon numerous treaties and has
undergone several expansionsundergone several expansionsGrow from 6 member states to 27Grow from 6 member states to 27Generates 30% of the nominal gross world Generates 30% of the nominal gross world
productproduct16/27 member states use the same 16/27 member states use the same
currency – the eurocurrency – the euro
History of FormationHistory of Formation
1951 – 1951 – Treaty of Paris forms the European Treaty of Paris forms the European
Coal and Steel Community (ECSC)Coal and Steel Community (ECSC)
Regulate European industry & improve Regulate European industry & improve
commerce, after WWIIcommerce, after WWII
Six founding states:Six founding states:
BelgiumBelgium ItalyItaly
FranceFrance LuxembourgLuxembourg
GermanyGermany NetherlandsNetherlands
History of Formation History of Formation contd.contd.
1957 – 1957 – Treaty of Rome forms:Treaty of Rome forms:
The European Economic Community (EEC)The European Economic Community (EEC)
The European Atomic Energy CommunityThe European Atomic Energy Community
Common MarketCommon Market
Abolition of internal tariff barriers was achieved in 1968Abolition of internal tariff barriers was achieved in 1968
Original six founding membersOriginal six founding members
Worked concurrently with ECSCWorked concurrently with ECSC
History of Formation History of Formation contd.contd.
Enlargement AccededEnlargement Acceded
1973: United Kingdom, Denmark, and Ireland1973: United Kingdom, Denmark, and Ireland
1981: Greece1981: Greece
1986: Spain and Portugal1986: Spain and Portugal
History of Formation History of Formation contd.contd.
Enlargement Did Not AccedeEnlargement Did Not Accede
1973: Norway applied & accepted1973: Norway applied & acceptedGovernment lost on national referendumGovernment lost on national referendum
1987: Morocco and Turkey applied1987: Morocco and Turkey appliedMorocco – turned down – not considered EuropeanMorocco – turned down – not considered European
Turkey – acceptedTurkey – accepted
Received candidate status in 2000Received candidate status in 2000
Began officially membership negotiations in 2004Began officially membership negotiations in 2004
History of Formation History of Formation contd.contd.
1992 – 1992 – Maastricht Treaty SignedMaastricht Treaty Signed
1993 – European Union (EU) formed out of the old 1993 – European Union (EU) formed out of the old
EECEEC
Later EnlargementLater Enlargement
1995 – Finland, Sweden, and Austria1995 – Finland, Sweden, and Austria
2004 – Cyprus, Czech Republic, Estonia, Hungary, 2004 – Cyprus, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Slovakia, SloveniaLatvia, Lithuania, Malta, Poland, Slovakia, Slovenia
2007 – Romania and Bulgaria2007 – Romania and Bulgaria
EU in Economic IntegrationEU in Economic Integration
1.1. Preferential Trading AreaPreferential Trading Area2.2. Free Trade AreaFree Trade Area3.3. Customs UnionCustoms Union
4.4. Common MarketCommon Market
European UnionEuropean Union
5.5. Economic and Monetary UnionEconomic and Monetary Union6.6. Complete Economic IntegrationComplete Economic Integration
EuroEuro
Eurozone – currency union of 16 EU statesEurozone – currency union of 16 EU states Adopted the euro as the sole legal tenderAdopted the euro as the sole legal tender
AustriaAustria FranceFrance ItalyItaly PortugalPortugal
BelgiumBelgium GermanyGermany LuxembourgLuxembourg SlovakiaSlovakia
CyprusCyprus GreeceGreece MaltaMalta SloveniaSlovenia
FinlandFinland IrelandIreland NetherlandsNetherlands SpainSpain
Euro Euro contd.contd.
Euro used in other countriesEuro used in other countriesWith Formal AgreementWith Formal AgreementUse euro as official currency and mint coinsUse euro as official currency and mint coins
MonacoMonacoSan MarinoSan MarinoVaticanVatican
Without Formal AgreementWithout Formal AgreementAndorraAndorraMontenegroMontenegroKosovoKosovo
European Central BankEuropean Central Bank
Responsible for Responsible for monetary policy monetary policy covering covering
the 16 member states of the Eurozonethe 16 member states of the Eurozone
No common No common representationrepresentation, , governancegovernance, ,
or or fiscal policyfiscal policy for the currency union for the currency union
European Central Bank European Central Bank contd.contd.
Only one primary objectiveOnly one primary objectiveMaintain price stability within the EurozoneMaintain price stability within the Eurozone (inflation of below, but close to 2%)(inflation of below, but close to 2%)
Exclusive right to authorize the issuance of Exclusive right to authorize the issuance of euro banknoteseuro banknotes
Member States can issue euro coins but Member States can issue euro coins but the amount must be authorized by ECB the amount must be authorized by ECB
European Central Bank European Central Bank contd.contd.
Key tasksKey tasks
Define & implement the monetary policyDefine & implement the monetary policy
Conduct foreign exchange operationsConduct foreign exchange operations
Take care of the foreign reserves of the Take care of the foreign reserves of the
European System of Central BanksEuropean System of Central Banks
Promote smooth operation of the money market Promote smooth operation of the money market
infrastructureinfrastructure
Who Runs the European Union Who Runs the European Union
The EU is run by the European The EU is run by the European Commission Commission
The European commission is responsible The European commission is responsible for:for:
proposing legislation, proposing legislation, implementing decisions, implementing decisions, upholding the Union’s treaties upholding the Union’s treaties and the general day-to-day running of the and the general day-to-day running of the
Union. Union.
Who Runs the European Who Runs the European CommissionCommission
The president of the European The president of the European Commission is José Manuel Barroso Commission is José Manuel Barroso
The commission has 27 Commissioners, The commission has 27 Commissioners, one for each member stateone for each member state
President Barroso is one of the 27 President Barroso is one of the 27 commissioners and started his term in commissioners and started his term in 2004 and is serving a five year term2004 and is serving a five year term
The State of EU The State of EU Commission President José Manuel Barroso has Commission President José Manuel Barroso has outlined ways for the EU to survive the economic crisis. outlined ways for the EU to survive the economic crisis. ““Today we are asking EU leaders to agree on a Today we are asking EU leaders to agree on a comprehensive action plan. To do everything possible to comprehensive action plan. To do everything possible to protect our citizens from unemployment. To clean up protect our citizens from unemployment. To clean up financial markets on the basis of the de Larosière financial markets on the basis of the de Larosière Report. And to pave the way for Europe to lead by Report. And to pave the way for Europe to lead by example and by persuasion as we approach the G20 example and by persuasion as we approach the G20 summit in London." summit in London."
The Banking SystemThe Banking System
The commission has urged the European The commission has urged the European banks to restore confidence to promote banks to restore confidence to promote lending to start flowing againlending to start flowing again
One of the major recommendations is to One of the major recommendations is to have the banks remove the impaired have the banks remove the impaired assists from the banks balance sheets assists from the banks balance sheets
Financial regulation and Financial regulation and supervisionsupervision
the key principles are set by the de Larosière Group the key principles are set by the de Larosière Group The Larosiere Group is run by Jacques De Larosiere, The Larosiere Group is run by Jacques De Larosiere,
who is the Chairman of the High Level Group on cross – who is the Chairman of the High Level Group on cross – boarder financial supervisionboarder financial supervision
They would be responsible for the regulation of the EU’s They would be responsible for the regulation of the EU’s financial regulation and supervisionfinancial regulation and supervision
bring forward initiatives already in the pipeline on hedge bring forward initiatives already in the pipeline on hedge funds, private equity and remuneration structures funds, private equity and remuneration structures
Outline new supervisory framework and on issues Outline new supervisory framework and on issues including: liquidity risk and excessive leverage; further including: liquidity risk and excessive leverage; further reinforcing protection for depositors and policy holders; reinforcing protection for depositors and policy holders; and effective sanctions against wrongdoingand effective sanctions against wrongdoing
The Real Economy The Real Economy
Expect an overall GDP of 3.3% for the 2009 – Expect an overall GDP of 3.3% for the 2009 – 2010 period2010 period
This is attributed to the European Recovery PlanThis is attributed to the European Recovery Plan The goal is to build on a low carbon economy The goal is to build on a low carbon economy
and with returning to sustainable public finances and with returning to sustainable public finances as soon as possible.as soon as possible.
The EU has targeted an investment of €5 billion The EU has targeted an investment of €5 billion euros in energy interconnections and euros in energy interconnections and broadband.broadband.
Employment Employment
The Unemployment rate is estimated to be 10% The Unemployment rate is estimated to be 10% by 2010by 2010
Member states should implement measures Member states should implement measures such as financial support for temporary working-such as financial support for temporary working-time arrangements, boosting income support for time arrangements, boosting income support for unemployed people, lowering non-wage costs unemployed people, lowering non-wage costs for employers and boosting investment in skills for employers and boosting investment in skills and retraining. and retraining.
rapid approval of its proposal of €1.8 billion in rapid approval of its proposal of €1.8 billion in advance payments under the European Social advance payments under the European Social Fund is neededFund is needed
Promoting global recoveryPromoting global recovery
The EU should make a united push to focus on: The EU should make a united push to focus on: better transparency and accountability; better transparency and accountability;
appropriate regulation of all financial actorsappropriate regulation of all financial actors tackling difficulties caused by uncooperative tackling difficulties caused by uncooperative
jurisdictions jurisdictions boosting international supervisory cooperation; boosting international supervisory cooperation;
and reforming the IMF, Financial Stability Forum and reforming the IMF, Financial Stability Forum and World Bank. and World Bank.
Concerns Concerns
The EU has failed to consolidate and The EU has failed to consolidate and strengthen its political union strengthen its political union
They also have not taken adequate action They also have not taken adequate action to alleviate the “democratic deficit”to alleviate the “democratic deficit”
The EU has grown to fast and has not The EU has grown to fast and has not updated its decision-making structureupdated its decision-making structure
There is no constitution which makes even There is no constitution which makes even simple decisions toughsimple decisions tough
ContCont
The economic union has intensified and The economic union has intensified and they have become enormously integrated they have become enormously integrated with one another with one another
The EU has created a single market but in The EU has created a single market but in the process of creating this single market the process of creating this single market they did not create a governing system to they did not create a governing system to regulate the market regulate the market
Because of the current economic situation Because of the current economic situation this has become a glaring weaknessthis has become a glaring weakness
ContCont
Many believe the biggest problem is that the Many believe the biggest problem is that the citizens in the EU don’t understand the citizens in the EU don’t understand the importance of the EU and don’t care much about importance of the EU and don’t care much about what the EU is doingwhat the EU is doing
Public support in many countries has soured Public support in many countries has soured and given way to people supporting there own and given way to people supporting there own countries and not the Unioncountries and not the Union
This has lead to some countries citizens to call This has lead to some countries citizens to call for protectionism for there goods and services for protectionism for there goods and services
Gideon RachmanGideon Rachman
A British EU skeptic who in 2001 warned of A British EU skeptic who in 2001 warned of potential problems with the growth of the EU:potential problems with the growth of the EU:
He believed people would be more loyal to their He believed people would be more loyal to their home lands then the Union in times of turmoil home lands then the Union in times of turmoil
He believed in a crisis, nationalist instincts would He believed in a crisis, nationalist instincts would come to the forefront come to the forefront
He also expected the euro could run into troubleHe also expected the euro could run into trouble
RachmanRachman
Many of Rachman’s insights are coming Many of Rachman’s insights are coming truetrue
The strain of the economic crisis has The strain of the economic crisis has opened up divisions with in the union thus opened up divisions with in the union thus causing the EU to call an emergency causing the EU to call an emergency meeting to combat protectionismmeeting to combat protectionism
Several new members of the union are Several new members of the union are facing banking crisis and old members of facing banking crisis and old members of the union have refused to bail them out the union have refused to bail them out
Fears Fears The fear is that all of the unrest will cause the The fear is that all of the unrest will cause the
union to start rolling back the four freedoms union to start rolling back the four freedoms already established by the EU:already established by the EU:
Free movement of goods:Free movement of goods: People People Services Services Capital Capital Many fear that a restriction in any of these Many fear that a restriction in any of these
freedoms would cause panic amongst the EU freedoms would cause panic amongst the EU members thus creating a more unsettled members thus creating a more unsettled economic situation economic situation
Cont.Cont.
The fears of the EU collapsing are legitimate but The fears of the EU collapsing are legitimate but not likelynot likely
The EU still provides a free and peaceful way of The EU still provides a free and peaceful way of lifelife
It also offers “the right to live and work anywhere It also offers “the right to live and work anywhere in Europe; the right to make a business deal in Europe; the right to make a business deal without the government stopping you; the right without the government stopping you; the right to hop on a train to Paris or a plane to Madrid to hop on a train to Paris or a plane to Madrid with out being hassled at immigration” with out being hassled at immigration” (Rachman)(Rachman)
Conclusion Conclusion
It is up to the European Commission to hold the It is up to the European Commission to hold the Union togetherUnion together
The EU will have to fight off the panic of the The EU will have to fight off the panic of the more established nations who will fight for more established nations who will fight for protectionism and nationalism to gain favor with protectionism and nationalism to gain favor with their citizenstheir citizens
If they can do this the EU stands a good chance If they can do this the EU stands a good chance to survive and learn from its past misgivings to survive and learn from its past misgivings
Resources Resources http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/351
&format=HTML&aged=0&language=EN&guiLanguage=en http://ec.europa.eu/publications/booklets/eu_glance/66/en.pdf http://en.wikipedia.org/wiki/European_Commission http://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/European_Union http://en.wikipedia.org/wiki/Enlargement_of_the_European_Unionhttp://en.wikipedia.org/wiki/Enlargement_of_the_European_Union http://en.wikipedia.org/wiki/Eurozonehttp://en.wikipedia.org/wiki/Eurozone http://en.wikipedia.org/wiki/European_Central_Bankhttp://en.wikipedia.org/wiki/European_Central_Bank http://www.epp-ed.eu/Press/showpr.asp?http://www.epp-ed.eu/Press/showpr.asp?
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