Euguide

EuropeanUnionThe

“The Union is

founded on the principles

of liberty,democracy,respect for

human rights and fundamental freedoms,

and the rule of law, principles which are

common to the Member States.”

—ARTICLE 6, TREATY ON EUROPEAN UNION

A G U I D E F O R A M E R I C A N S

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Editor’s NotesTwelve new Member States. A robust securitystructure. New programs to promote develop-ment and stabilization. A leading role in theglobal effort to combat terrorism. These areamong the many recent or ongoing changes tothe European Union described in this guide asthe EU extends its social and economic agendainto the 21st century to promote democracy andstability in Europe and around the world.

This “Guide for Americans” covers allaspects of the European Union, from its initialincarnation as the six-nation European Coaland Steel Community created by six nations in1951, to the formal creation of the Union in1993 with the implementation of the MaastrichtTreaty on European Union, to the most recentdevelopments, including the admission of 12new Member States since 2004.

The term “European Union” (EU) is used inthis brochure whenever appropriate. Otherterms, such as “European Community” (EC)and “European Coal and Steel Community”(ECSC), are used when the historical contextis appropriate or to describe the statutoryfunctions of bodies that still have legal identi-ties within the EU.

All information regarding EU institutions,policies, and programs is the most recentavailable at the time of publication. For updatedinformation, please consult www.eurunion.org,the website of the the European CommissionDelegation in Washington.

Where possible, financial amounts appear inU.S. dollars and are converted from eurosusing the appropriate annual dollar to euroexchange rate.

ContentsIntroduction: 1Ambassador’s Welcome

Chapter 1: 2What Is the European Union?

Chapter 2: 6How Is the EU Run? A Unique Governing System

Chapter 3: 10EU Relations with the United States

Chapter 4: 13Europe Whole and Free: The EU Projecting Peace, Stability, and Prosperity

Chapter 5: 16Europe in the World

Chapter 6: 25Making Decisions Together: An A to Z of EU Policies

Annexes 36MilestonesEU AgenciesEU Acronyms and Abbreviations

2007 Accession Day celebration.

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Few bonds in the world are asstrong as those between theEuropean Union and the United

States. Across the Atlantic, we share afirm commitment to peace,democracy, human dignity, and pros-perity. Over half a century of closecooperation, common values,economic partnership, and friendshiphave solidified transatlantic ties.

The European Union owes much toAmerican inspiration and support. Fromour earliest days, we studied the U.S.experience and emulated many of thebest characteristics of American govern-ment. Separation of powers, checks andbalances, and public accountability arejust some of the many aspects of theEuropean unification system deeplyrooted in American structures.

The United States has always been astrong backer of European integration,which has had the support of everyAmerican president since the 1950Schuman Declaration laid out a visionfor a united Europe. The United Stateswas the first nation to recognize theEuropean Coal and Steel Community,the precursor to today’s EU, and thefirst to establish a diplomatic presencebefore the Community.

Today’s European Union, with closeto 500 million citizens in 27 MemberStates, embraces a strong partnershipwith the United States. Together, wework for peace and security aroundthe world, advance democracy andhuman rights, and address global chal-lenges. We have the world’s mostimportant economic, trade, and invest-ment relationship. A vibrant dialoguebetween Europe and America takesplace every day and on many levels—between government institutions,political leaders, business executives,non-governmental and professionalorganizations and, literally, millions ofcitizens on both sides of the Atlantic.

To make our partnership even moreproductive, it is important that we

know more about each other—howour political, economic, and socialsystems function, and how we makedecisions that advance our commongoals. With this in mind, we havefashioned The European Union: AGuide for Americans to help Americansbetter understand the EuropeanUnion, its values and priorities, andour shared responsibility to worktogether for a better world.

Ambassador John BrutonHead of DelegationEuropean CommissionWashington, D.C.

Ambassador’s Welcome

Celebrating The EU’s Birthday: 50 Years of European IntegrationMarch 25, 2007 marks the 50th Anniversary of the Treaties of Rome, whichcreated the European Atomic Energy Community and the European EconomicCommunity, the forerunners, along withthe European Coal & Steel Community,of the modern European Union. Today,after five enlargements, the 27-memberEU, prosperous and vibrant, stands as aunifying force for peace and freedom, democracy and the rule of law, andrespect for human rights and equality, both at home and abroad.

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Chapter One

The European Union is not a federationlike the United States. Nor is it simply anorganization for cooperation between gov-ernments, like the United Nations. Neitheris it a State intended to replace existingstates, but it is much more than any other

international organization. The EU is, infact, unique. Never before have countriesvoluntarily agreed to set up common insti-tutions to which they delegate some oftheir sovereignty so that decisions onspecific matters of joint interest can bemade democratically at a higher, in thiscase European, level. All EU decisions and

procedures are based on the treaties agreedto by all EU countries, under which sover-eignty is shared in specified areas. Theresult is a union of 27 Member Statescovering 1.6 million square miles withroughly half a billion people producing

almost a third of the world’s gross nationalproduct and speaking more than 23languages, bound together by a desire topromote peace, democracy, prosperity,stability, and the rule of law.

The EU embraces the fundamentalvalues shared by its Member States across amultitude of cultures, languages, and tradi-

tions. The Member States agree thatdemocracy is the best form of government.They believe in societies that encouragepluralistic political thought and endorsefreedom of speech and religion. Theysupport free market economies—whereeconomic development and growth aredriven by the private sector and facilitatedby governments. They believe prosperouscountries have an obligation to help poorerand less developed regions and nations.And they value living together in peace aswell as promoting these principles globally.

The EU sets high standards for mem-bership. Candidate states must have stabledemocratic governments; respect for therule of law, minorities, and human rights;a functioning market economy; and theability to take on the obligations of EUmembership. That is, prospectivemembers must have the capacity to adoptand implement the body of EU laws andregulations that ensure cooperation in amultitude of areas in addition to tradeand the economy, including citizens’rights, freedom, security, and justice, jobcreation, regional development, environ-mental protection, and making globaliza-tion work for everyone.

History:The Union’s OriginsEconomic integration was launched in thewake of World War II, as a devastated

Western Europe sought to rebuild itseconomy.

On May 9, 1950, French Foreign MinisterRobert Schuman announced a plan—in aspeech inspired by French businessmanturned-advisor Jean Monnet—thatproposed pooling European coal and steelproduction under a common authority.While contributing to economic recovery,this plan would also control the rawmaterials of war. The Schuman Declarationwas regarded as the first step towardachieving a united Europe—an ideal thatin the past had been pursued only by force.Belgium, the Federal Republic of Germany,Italy, Luxembourg, and the Netherlandsaccepted the French proposal and signedthe European Coal and Steel Community(ECSC) Treaty in Paris on April 18, 1951.The Six set up the ECSC High Authority, towhich member governments transferredportions of their sovereign powers. Coaland steel trade increased by 129 percentover the next five years.

Encouraged by this success, the Sixpursued integration in the military andpolitical fields. When these efforts werederailed, European leaders decided tocontinue the unification of Europe on theeconomic front alone. A historic meetingin Messina, Italy, in June 1955, launchedthe negotiations for two new treaties, thefirst to establish a European EconomicCommunity (EEC) to merge separatenational markets into a single market thatwould ensure the free movement of goods,

What is the European Union? A Union of States and Peoples

Jean Monnet and other leaders with the first “European” ingot of steel.

2 The European Union: A Guide for Americans


people, capital, and services through devel-opment of common economic policies;and the second to create a EuropeanAtomic Energy Community (EAEC orEURATOM) to further the use of nuclearenergy for peaceful purposes.

The Six signed the treaties on March 25,1957, in Rome. Often referred to as the“Rome Treaties,” both the EEC and the EAECTreaties came into force in January 1958.

The Treaties That Built the UnionThe European Union has been builtthrough a series of treaties that representbinding commitments by the MemberStates. Treaties are negotiated by MemberStates through intergovernmental confer-ences, or “IGCs,” that culminate in asummit chaired by the Member Stateholding the Council presidency.

This process began with three separatetreaties dating from the 1950s: theEuropean Coal and Steel CommunityTreaty (ECSC), the European AtomicEnergy Community Treaty, (EURATOM),and the European Economic CommunityTreaty (EEC). In 1967, the ECSC, theEAEC, and the EEC collectively becameknown as the European Communities. TheSingle European Act (SEA) in 1987 facili-tated the creation of the single market.Major elements of the SEA included insti-tutional reform and the expansion ofEuropean Community powers in researchand development, the environment, and

common foreign policy.The Treaty on European Union, signed in

Maastricht, Netherlands (“the MaastrichtTreaty”), and in effect since November1993, was a major overhaul of thefounding treaties. Maastricht provided ablueprint to achieve Economic andMonetary Union (EMU), furtherdeveloped the Union’s inherent politicaldimension through the new CommonForeign and Security Policy (CFSP), andexpanded cooperation in judicial andpolicing matters. It created the “threepillar” European Union that exists today:

Pillar One incorporates the threefounding treaties now forming the“European Community” and sets out theinstitutional requirements for EMU. It alsoprovides for expanded Community actionin certain areas, such as the environment,research, education, and training.

Pillar Two established the CFSP, whichmakes it possible for the Union to takejoint action in foreign and security affairs.

Pillar Three created the Justice andHome Affairs (JHA) policy, dealing withasylum, immigration, judicial cooperationin civil and criminal matters, and customsand police cooperation against terrorism,drug trafficking, and fraud. The CFSP andJHA operate by intergovernmental cooper-ation, rather than through the Communityinstitutions that operate Pillar One.Maastricht also created European citizen-ship and strengthened the EuropeanParliament’s legislative role in certain areas.

The Treaty of Amsterdam took effect in1999 and reformed EU institutions tosupport its economic and security objec-tives. Major provisions include extendingthe scope of qualified majority voting,increasing the European Parliament’sresponsibilities by making the co-decisionprocedure the general rule, extending thenumber of policy areas—such as employ-ment, social issues, and immigration—in which Parliament can exercise vetopower, and strengthening the CommonForeign and Security Policy and the EU’sability to undertake joint foreign policyactions. Indeed, as few as two-thirds ofMember States can act together on behalfof the EU. Member States that “construc-tively abstain” on CFSP issues are not ableto take any action that impedes themajority decision.

The Treaty of Nice (2003) set the condi-tions for EU expansion by revising insti-tutional policies. The treaty extendedmajority voting even further, re-weightedvotes within the Council of the EuropeanUnion, and extended the use of “enhancedcooperation,” which allows groups of atleast eight Member States to proceed withpolicy initiatives that do not infringe onthe rights of other members. It also redis-tributed Member State representationwithin the European Parliament, restruc-tured the European Commission,strengthened its presidency and recog-nized and legislated the role of politicalparties at the EU level and in EU process.

European Constitutional Treaty In October 2004, Heads of State andGovernment and Foreign Ministers signedthe Treaty establishing a Constitution forEurope, which provides for changes to theEU’s governing institutions and decision-making processes. This new treaty grew outof the 2002–2003 Convention on the Futureof Europe and builds upon previous EUefforts to institute internal reforms enablingan enlarged EU to function more effectively,more transparently, and closer to Europeancitizens. It also contains measures to raisethe EU’s visibility on the world stage.

Major innovations in the Constitutioninclude abolishing the EU’s rotatingEuropean Council presidency and insteadappointing a single individual to serve aspresident of the European Council for upto five years; creating the post of foreignminister and a foreign service; increasingthe powers of the European Parliament;and simplifying EU voting procedures. Italso strengthens the EU’s democratic baseby providing citizens with new avenuesfor direct participation in EU governanceand by involving the national parliaments.Other changes would improve operationsand transparency.

To enter into force, the Constitutionrequires ratification by each EU MemberState by popular referendum or parliamen-tary vote. While it has been ratified by 18Member States, “no” votes prevailed inFrance and the Netherlands in 2005.Subsequently, the European Council stated

Chapter OneWhat is the European Union?

Signing of the Treaty of Rome.

The European Union: A Guide for Americans 3


Chapter OneWhat is the European Union?


The 27 European Union Member States

Country Council Members of Population GDP CurrencyVotes European (millions) (2005)

Parliament (billions $)Austria 10 18 8.2 305 EuroBelgium 12 24 10.5 370 EuroBulgaria 10 18 7.7 27 LevCyprus 4 6 0.8 16 EuroCzech Republic 12 24 10.2 122 Czech KorunaDenmark 7 14 5.4 258 Danish CrownEstonia 4 6 1.4 14 Estonian KroonFinland 7 14 5.2 192 EuroFrance 29 78 60.6 2,104 EuroGermany 29 99 82.5 2,785 EuroGreece 12 24 11.1 224 EuroHungary 12 24 10.1 109 ForintIreland 7 13 4.1 198 EuroItaly 29 78 58.5 1,757 EuroLatvia 4 9 2.3 16 LatsLithuania 7 13 3.4 26 LitasLuxembourg 4 6 0.5 36 EuroMalta 3 5 0.4 5 EuroNetherlands 13 27 16.3 623 EuroPoland 27 54 38.2 299 ZlotyPortugal 12 24 10.5 182 EuroRomania 14 35 21.6 99 LeuSlovakia 7 14 5.4 46 Slovak KorunaSlovenia 4 7 2.0 34 EuroSpain 27 54 43.0 1,121 EuroSweden 10 19 9.0 357 Swedish CrownUnited Kingdom 29 78 60.0 2,194 Pound SterlingEU27 Total 345 785 490 $13.5

million trillion


Chapter One

that the concerns and worries expressed byvoters would be taken into account andcalled for a period of reflection and debate.

More recently, Germany, which holds theEU Presidency during the first half of 2007,as well as Portugal and Slovenia (the twosuccessive Presidencies), have agreed that aconsultative report exploring future devel-opments will be presented to the EuropeanCouncil, which will then determine howbest to continue the reform process. Thegoal is to complete all necessary steps nolater than the second half of 2008.

The situation with the Constitutiondoes not alter the legal underpinnings ofthe EU, which operates just as it did priorto the referenda.

The Impact of the EU The European Union has delivered half acentury of peace, stability, and prosperity,helped raise living standards, launched asingle European currency (the Euro), and

is progressively building a single Europe-wide market in which people, goods,services, and capital move among MemberStates as freely as within one country.

EU residents benefit in numerous ways.They can expect consistent delivery ofimportant services, from education tohealth care to transportation, which mustmeet agreed-upon standards. They knowthat products such as food or medicalsupplies will be safe and environmentallysound regardless of where they originatein the EU. They know that men andwomen must receive equal pay for equalwork, a requirement that reflects the EU’spioneering role in the fight for women’srights. Citizens of the European Unionknow they are free to live in any EUcountry and have equal access to justicethroughout the Union. And most impor-tantly, they know that their fundamentalrights, including the freedom of thought,conscience, and religion, are protected.

The EU has also strengthened Europe’svoice in the world. The Union is engagedin rebuilding lives and communities inareas of conflict such as Afghanistan andthe former Yugoslavia. The EU supportsefforts to achieve peace in the Middle East,promotes sound environmental practices,and contributes to global efforts to controlnuclear proliferation. Judicial, law enforce-ment, and security officials cooperateinternationally to combat terrorism andtransnational crime.

The EU and its Member States are thelargest providers of development assistancearound the world—from combatingpoverty to fighting HIV/AIDS and othercommunicable diseases. And the Union is

involved in other areas that support devel-opment and reduce poverty, such as peace-keeping, election observing, and providinghumanitarian and reconstruction aid inthe wake of natural disasters and conflict.

European and global markets benefitfrom the EU’s ability to negotiate interna-tional trade agreements on behalf of itsMember States. For example, open anduniform access to the European market forU.S. manufacturers, service companies, andinvestors has resulted in a vibranteconomic relationship—the largest in theworld—that provides roughly $1.5 billionin transatlantic trade each day andsupports jobs for 7 million Americans andabout the same number of Europeans.

What is the European Union?

(right) Signing ceremony for the Maastricht Treaty.

(far right) Slovenia joined the euro area on January 1, 2007.

(below) At the July 2002 Youth Convention on the Future of Europe.


The European Union is often compared to the United States, and there are indeed somesimilarities in function and organization. The Member States of the EU have agreed topool some of their sovereign powers for the sake of unity and promotion of shared values,just as American states did to create a federal republic. In the fields where national sover-eignty has been pooled, such as trade, the EU negotiates directly with the United Statesand other countries on behalf of all the Member States. Thirteen Member States thus farhave also joined together their monetary policy and adopted the euro as their currency.

But there are also many differences. Unlike the American states, EU Member Statesretain their individual authority in many fields, such as security and defense, although theynow can take joint action in certain foreign and security policy areas. All U.S. laws requireapproval by both houses of Congress, while in the EU, some laws require approval onlyby the Council of the European Union and not the European Parliament.

Finally, the EU operates according to the principle of “subsidiarity”—meaning that responsibili-ty for issues for which the EU and Member States have oversight devolves to the lowest levelat which it can be effectively addressed. The practical outcome is that the Union is grantedjurisdiction only over those policies that can be handled more effectively at the EU level.

In short, Europe is constructing its own unique model for unification, ensuring respect forthe historical, cultural, and linguistic diversity of the European nations.

A United States of Europe?



Chapter Two

The European Union is governed byseveral institutions that reflect the EU’sunique, dual supranational and intergov-ernmental character. The EU has the powerto enact laws that are directly binding oncitizens from many countries, a fact thatdistinguishes the Union from any othergovernment or international organization.

Member States have relinquished part oftheir national sovereignty to EU institu-tions, leading to descriptions of the Unionas a supranational entity, with manydecisions made and final authority residingat the EU level. In specified areas, theMember States work together in their col-lective interest through EU institutions toadminister sovereign powers jointly. TheEU’s decision-making process involvesthree main institutions, all set up in the1950s under the EU’s founding treaties.

The European Commission proposesnew legislation while the Council of theEuropean Union and European Parliamentadopt the laws. This institutional triangleproduces policies and laws that applythroughout the EU. Two other institutionsalso play a vital role: the European Courtof Justice upholds the rule of Europeanlaw, and the Court of Auditors checks thefinancing of Union activities.

Other institutions and bodies also playimportant roles.

Governing InstitutionsThe European Commission The European Commission (EC) is essen-tially the European Union’s executivebranch and has the sole right of legislativeinitiative. It is independent of national gov-ernments and represents the European (asopposed to individual Member State) per-spective. The Commission is comprised of27 appointed Commissioners—one fromeach EU country—each of whom isresponsible for specific policy areas. TheCommission ensures that the provisions ofthe EU treaties are applied correctly andrepresents the EU internationally, negotiat-ing with non-EU countries in areas fallingunder the competence of the EuropeanCommunity (EC). The Commission alsofulfills an administrative role.

A new Commission is appointed everyfive years, within six months of theEuropean Parliament elections. Theprocess involves several steps with inputfrom Member States and the EuropeanParliament:• Member State governments agree on a

new Commission President-designate.• Parliament approves the Commission

President-designate.• The Commission President-designate

chooses the other Members of theCommission, in consultation withMember State governments.

• Parliament interviews each Member andissues its opinion on the whole team.Once approved, the new Commissioncan officially start work.The present Commission’s term runs

through October 31, 2009. The President ofthe European Commission is José ManuelBarroso of Portugal.

The Commission remains politicallyaccountable to Parliament, which has thepower to dismiss the entire Commission byadopting a motion of censure. Individualmembers of the Commission must resign ifasked to do so by the President, providedthe other commissioners approve.

The Commission attends all the sessionsof Parliament, where it must clarify andjustify its policies, in addition to replyingregularly to written and oral questionsposed by MEPs.

The seat of the Commission is inBrussels (Belgium), but it also has offices inLuxembourg, representations in all EUcountries, and delegations in many capitalcities around the world.

The European Commission has fourmain roles:1.Proposing legislation to Parliament and

the Council. Proposed legislation mustdefend the interests of the Union and itscitizens, not those of specific countries orindustries. The Commission also seeks theopinions of national parliaments and gov-ernments. To get the technical details right,the Commission consults experts throughits various committees and groups.

2.Managing and implementing EUpolicies and the budget. TheCommission is responsible for adminis-tering and supervising expendituresunder the oversight of the Court ofAuditors. Most of the actual spending isdone by national and local authorities.

3.Enforcing European law (jointly withthe Court of Justice). The Commissionacts as guardian of the Treaties and cantake legal action and refer cases to theEuropean Court of Justice againstpersons, companies, or Member Statesthat violate EU rules.

4.Representing the European Union onthe international stage. TheCommission negotiates agreementsbetween the EU and other countries andprovides official presence in delegationsthroughout the world.

The Council of the European UnionThe Council is the EU’s main decision-making body, and represents the MemberStates. One minister from each of the EU’snational governments attends Councilmeetings. Different ministers are assignedto specific issue areas (e.g., agriculturalministers decide farm policy).

EU relations with the rest of the world aredealt with by the General Affairs and ExternalRelations Council. Since this Council config-uration also has wider responsibility forgeneral policy issues, its meetings areattended by the minister or State Secretarychosen by each Member State government.

How is the EU Run?A Unique Governing System

(right) European Parliament in session.

(far right) EU leaders meet the press followinga meeting of the Council of the European Union.


Each minister in the Council isempowered to commit his or her govern-ment—the minister’s signature representsthe assent of the whole government.

The Presidency of the Council rotatesevery six months with terms running fromJanuary through June and July throughDecember. Each EU country in turn takescharge of the Council agenda and chairs allthe meetings for a six-month period,promoting legislative and politicaldecisions and brokering compromisesamong the Member States.

The Council of the European Union hassix key responsibilities:1.Adopting European laws—jointly with

the European Parliament in many policyareas.

2.Coordinating the broad economicpolicies of the Member States.

3.Concluding international agreementsbetween the EU and other countries orinternational organizations.

4.Approving the EU’s budget, jointly withthe European Parliament.

5.Developing the EU’s Common Foreignand Security Policy (CFSP), based onguidelines set by the European Council.

6.Coordinating cooperation between thenational courts and police forces incriminal matters (see the Freedom,security, and justice section).Most of these responsibilities relate to the

“Community” domain or the “first pillar”of the EU—e.g., policy areas where theMember States have decided to pool their

sovereignty and delegate decision-makingpowers to the EU institutions. However,the last two responsibilities listed aboverelate largely to areas in which the MemberStates have not delegated their powers butare simply working together. This is calledintergovernmental cooperation and itcovers the second and third “pillars” of theEuropean Union.

Decisions in the Council are reached byweighted votes of Member State ministers.The bigger the country’s population, themore votes it has, but the numbers areweighted in favor of the less populouscountries. Most decisions require supportby a majority of Member States represent-ing at least 62 percent of the EU popula-tion. Unanimity is required in areas such asCommon Foreign and Security Policy,taxation, and asylum and immigrationpolicy. Effectively, each Member State hasveto power in areas subject to unanimity.On most issues, however, the Councilmakes decisions by qualified majorityvoting (QMV). A qualified majority isreached if a majority of Member States (insome cases a two-thirds majority) approvea measure and if a minimum of 255 of the345 votes—73.9 percent—are cast in favorof the measure.

In the area of Common Foreign andSecurity Policy, at least two-thirds ofMember States can act together on behalfof the EU. A minimum of eight MemberStates can take action in certain areas,provided that participation is open to all

and that the rights of other Member Statesare not infringed upon.

The European Council. The presidentsand/or prime ministers of the MemberStates, together with the President of theEuropean Commission, meet as the“European Council” up to four times ayear. These summit meetings set overall EUpolicy and resolve issues that could not besettled at the ministerial level (i.e., by theministers at Council of the EU meetings).

The European Parliament Since 1979, the European Parliament (EP)has been directly elected by the EU’scitizens under a system of population-based proportional representation, witheach member serving a five-year term.

The present Parliament, elected in June2004, has 785 members representing all 27EU countries. Nearly one-third ofParliament’s members are women.

Parliament elects a president who serves

a two-and-a-half year term. In 2007, Hans-Gert Poettering was elected President ofthe European Parliament.

Parliament has three main roles:1.Passing European laws—jointly with the

Council in many policy areas. The EP canveto legislation in specific policy areas.

2.Exercising democratic supervision overthe other EU institutions, in particular theCommission. Parliament has the power toapprove or reject the nomination of com-missioners, and it has the right to censurethe Commission as a whole.

3.Adopting or rejecting the EU budget inits entirety. Parliament shares authoritywith the Council over the EU budget andcan therefore influence EU spending.Members of the European Parliament

(MEPs) do not sit in national blocks, but inEurope-wide political groups. Betweenthem, they represent all views on Europeanintegration, from the strongly pro-federal-ist to the openly “Euroskeptic.”


Chapter TwoHow is the EU Run?

European Parliament: Number of seats per political group (Jan. 2007)

Political group Abbreviation No. of seatsEuropean People’s Party (Christian Democrats) and European Democrats EPP-ED 277Socialist Group PES 218Alliance of Liberals and Democrats for Europe ALDE 106Greens/European Free Alliance Greens/EFA 42European United Left—Nordic Green Left GUE/NGL 41Independence/Democracy IND/DEM 23Union for Europe of the Nations UEN 44Identity, Tradition, and Sovereignty Group ITS 20Non-Attached NI 14TOTAL 785

The enlarged European Commission as of January 1, 2007.


The European Court of JusticeThe European Court of Justice (ECJ) of theEuropean Communities was set up underthe ECSC Treaty in 1952. Based inLuxembourg, it acts as the EuropeanUnion’s Supreme Court.

The ECJ ensures that EU legislation isinterpreted and applied uniformly in allEU countries. The Court has the power tosettle legal disputes between EU MemberStates, EU institutions, businesses, andindividuals. Its rulings are binding. TheCourt is composed of one judge perMember State, appointed by jointagreement between the governments ofthe EU Member States for a renewableterm of six years. For the sake of efficien-cy, however, the Court usually sits as aGrand Chamber of just 13 judges, or inchambers of three or five judges.

The Court is assisted by eight advocates-general who present reasoned opinions onthe cases brought before the Court,publicly and impartially.

To help the Court of Justice cope with alarge caseload and to afford citizens betterlegal protection, a Court of First Instancewas created in 1989. This court (which is attached to the Court of Justice) isresponsible for certain kinds of cases,particularly actions brought by privateindividuals, companies, and some organizations, as well as cases relating to competition law.

The Court of Justice and the Court ofFirst Instance each have a President, chosen

by fellow judges to serve for a three-year,renewable term.

A new judicial body, the European CivilService Tribunal, has been set up to adjudi-cate disputes between the European Unionand its civil service. This tribunal iscomposed of seven judges and is attachedto the Court of First Instance.

The European Court of Auditors The European Court of Auditors (ECA) wasset up in 1975 and is based in Luxembourg.The Court’s job is to check that EU funds,which come from the taxpayers, arecollected properly, spent legally and eco-nomically, and are used for their intendedpurpose. The ECA aims to ensure thattaxpayers get maximum value for theirmoney, and it has the right to audit anyperson or organization handling EU funds.

The Court is comprised of one memberfrom each EU country, appointed by theCouncil for a renewable six year term.Members elect one of their number asPresident for a renewable term of three years.

Other BodiesSeveral other bodies govern specific areas ofthe European Union or serve in advisory roles.

The European Economic and SocialCommitteeFounded in 1957 under the Treaty ofRome, the European Economic and SocialCommittee (EESC) is an advisory bodyrepresenting employers, trade unions,

farmers, consumers, and other civil societyin policy discussions with the Commission,the Council, and the European Parliament.The EESC also aims to bolster the role ofcivil society in non-EU countries and helpsset up advisory structures.

The Committee must be consulted beforedecisions are made on economic and socialpolicy. It may also give its opinion on othermatters on its own initiative or at therequest of another EU institution.

The 344 members are nominated by theMember State governments and roughlyreflect the size of each Member State’s pop-ulation. However, they work with completepolitical independence and are appointedfor a four-year, renewable term.

The Committee of the RegionsSet up in 1994, the Committee of theRegions (CoR) is an advisory body whosemembers represent Europe’s regional andlocal authorities.

The CoR must be consulted before EUdecisions are made on matters which havelocal and regional repercussions. TheCommittee can also adopt opinions on itsown initiative and present them to theCommission, Council, and Parliament.

The members of the Committee (344)are elected municipal or regional officials,often leaders of regional governments or city mayors, nominated by MemberState governments for a renewable four-year term.

How is the EU Run?


EU Agencies

An EU Community agency is a body governed by European public law; it is distinct fromthe Community Institutions (Council, Parliament, Commission, etc.) and has its own legalpersonality. It is set up by an act of secondary legislation in order to accomplish a veryspecific technical, scientific, or managerial task specified in the relevant Community act.

There are currently more than twenty bodies meeting the definition of Community agency,even though differing terms are used to designate them (Center, Foundation, Agency,Office, Observatory). Three of them—the European Defense Agency (EDA), the EuropeanUnion Institute for Security Studies (EUISS), and the European Union Satellite Center(EUSC)—carry out tasks for the Common Foreign and Security Policy (the secondpillar of the European Union). Three others—CEPOL, Europol, and Eurojust—help coor-dinate Police and Judicial Cooperation in criminal matters (the third pillar of theEuropean Union), CEPOL is the European Police College, Europol is the European PoliceOffice, and Eurojust is a permanent network of judicial authorities.

All the other agencies carry out tasks under the EU’s first pillar—the Community domain.

The objectives of the EU’s individual agencies and other bodies are many and varied, witheach fulfilling a unique function defined at the time of its creation. These entities introducea degree of decentralization to Community activities, giving a higher profile to theirassigned tasks. For some, their role includes integration with different interest groups tofacilitate dialogue with partners at all levels.

European Court of JusticeChapter Two


The European Central Bank The European Central Bank (ECB) was setup in 1998, and is based in Frankfurt,Germany. The ECB is responsible forframing and implementing the EU’smonetary policy including managing theeuro, the EU’s single currency. The legalbasis for the single monetary policy is theTreaty establishing the EuropeanCommunity and the Statute of theEuropean System of Central Banks and ofthe European Central Bank.

To carry out its role, the ECB works withthe European System of Central Banks(ESCB), which covers all 27 EU countries.However, only 13 EU Member States have

adopted the euro to date. Collectively, these13 make up the euro area and their centralbanks, together with the European CentralBank, comprise the Eurosystem.

The ECB works in complete independ-ence. Neither the ECB, the national centralbanks of the Eurosystem, nor any memberof their decision-making bodies can ask foror accept instructions from any other body.

The ECB, working closely with the nationalcentral banks, prepares and implements thedecisions made by the Eurosystem’s decision-making bodies—the Governing Council, theExecutive Board, and the General Council.

One of the ECB’s main tasks is to maintainprice stability in the euro area, ensuring thatthe euro’s purchasing power is not eroded byinflation. The ECB strives to keep the year-to-year increase in consumer prices under 2percent, controlling the money supply andmonitoring price trends in order to assessthe risk posed to price stability in the euroarea. Controlling the money supply involves,among other things, setting interest ratesthroughout the euro area, one of the Bank’sbetter known activities.

The European Investment BankThe European Investment Bank (EIB) wasset up in 1958 by the Treaty of Rome. Its jobis to lend money for projects of Europeaninterest (such as rail and road links, airports,or environmental efforts), particularly in theless well-off regions, candidate countries,and the developing world. It also providescredit for small business investments. The

EIB is non-profit and receives no moneyfrom savings or current accounts. Nor doesit use any funds from the EU budget.Instead, the EIB is financed throughborrowing on the financial markets and bythe Bank’s shareholders—the MemberStates of the European Union. They con-tribute jointly to its capital, each country’scontribution amount reflecting its economicweight within the Union.

This Member State backing gives the EIBthe highest possible credit rating (AAA) onthe money markets, enabling it to raiselarge amounts of capital on very competi-tive terms. In turn, the Bank is able toinvest in projects of public interest thatwould otherwise not get the money - orwould be forced to borrow at a higher rate.

The EIB also supports sustainable devel-opment in the Mediterranean countries,Africa, the Caribbean, and the Pacific, aswell as projects in Latin America and Asia.Finally, the EIB is the majority shareholder

in the European Investment Fund.

The European Investment FundThe European Investment Fund (EIF) wasset up in 1994 to help small businesses. TheEIB is its majority shareholder, with whichit forms the “EIB Group”.

The EIF provides venture capital to smallfirms (SMEs), particularly new firms andtechnology-oriented businesses. It alsoprovides guarantees to financial institutions(such as banks) to cover their loans to SMEs.

The EIF is not a lending institution: itdoes not grant loans or subsidies to busi-nesses, nor does it invest directly in anyfirms. Instead, it works through banks andother financial intermediaries, using eitherits own funds or those entrusted to it bythe EIB or the European Union.

The Fund is active in the Member Statesof the European Union, Turkey, and threeEFTA countries (Iceland, Liechtenstein,and Norway).

Chapter TwoHow is the EU Run?

EU Law and Legislation

Legislation is drafted by the Commission and requires approval by the Council and, in mostcases, the Parliament. The Commission considers legislation only when it believes an EU-levelremedy is necessary for a problem that cannot be solved by national or local governments.Legislation takes different forms, depending on the objective to be achieved.

• Laws, called regulations, are binding in their entirety, self-executing, directly applicable, and oblig-atory throughout EU territory. They can be compared to U.S. federal laws passed by Congress.

• Directives are binding in terms of the results to be achieved and are addressed to individualMember States, which are free to choose the best forms and methods of implementation.

• Decisions are binding in their entirety upon those to whom they are addressed—MemberStates, companies, or persons.

• Recommendations and opinions are not binding and can be initiated by institutions other thanthe Commission.

Co-Decision Procedure

This is the procedure now used for mostEU law-making. The European Parliamenthas the power of “co-decision” with theCouncil of the European Union, a powergranted in 1993 and expanded in 1999.Parliament does not merely give its opinionin this procedure—it shares legislativepower equally with the Council of the EU.The co-decision procedure requires the twobodies to agree on identical text before aproposal becomes law. If the Council andParliament cannot agree, a specialConciliation Committee is formed. Even ifthe committee agrees to a joint text, theParliament may still reject the proposed actby a majority vote of its members.

Areas covered by the co-decision procedureinclude: the internal market, employment,customs cooperation, consumer protection,research, environment, preventing andcombating fraud, statistics, and setting up adata protection advisory body.



Chapter Three

Transatlantic Economic Ties The economic relationship between theEuropean Union and the United States isperhaps the most defining feature of theglobal economy. The integration isbroader and deeper than between any twoother political regions in the world. TheEU and U.S. account for 37 percent ofglobal merchandise trade and 45 percentof world trade in services. The partner-ship is also the single most importantdriver of global economic growth, trade,and prosperity. And bilateral economicties are increasing every year.

The EU and the U.S. are each other’smain trading partners in goods andservices and account for the largestbilateral trade relationship in the world aswell as providing each other the most

important source of foreign direct invest-ment (FDI). The huge amount of bilateraltrade and investment illustrates the highdegree of interdependence of the twoeconomies. Bilateral trade between the EUand U.S. amounts to over $1.5 billion aday; investment links are even more sub-stantial, totaling over $1.8 trillion a year.The partnership supports about 14 millionjobs on both sides of the Atlantic and EU-U.S. trade accounts for almost 40percent of world trade.

Partnership on Multiple FrontsThe relationship between the two partners,however, goes beyond economic ties.The European Union and the United Statesincreasingly share the opportunities andresponsibilities of world leadership.

Together they work to promote commonvalues, including peace, freedom, and therule of law; create conditions for harmo-nious economic development worldwide;advance the stability of international trade,financial, and monetary systems; andstrengthen the economies of developingcountries and those in transition.

Acting on these shared values, the EUand U.S. have played a significant role inpromoting the institutions and interna-tional norms that helped bring an end tothe Cold War and subsequently encour-aged global trends toward democratizationand market integration.

The EU and the U.S. work together toconfront global challenges such as terrorism,threats to security and stability, weaponsproliferation, drugs, and organized crime.As partners promoting peace and stability,the EU and the United States recognize the

impact of regional conflicts, both in thedirect consequences of violence, and thewide-ranging, spin-off impact of crime,terrorism, poverty, and disease that canresult from such conflicts. The two partnersworked side-by-side to bring stability to theBalkans. The EU and the U.S., through theOSCE, have supported the Ukrainian gov-ernment in adapting legislation, structures,and processes to the requirements of amodern democracy.

In Afghanistan, the EU and the UnitedStates together have provided the lion’sshare of the international reconstructioneffort. In order to help the reconstructionof a democratic and stable Iraq, theEuropean Commission and U.S. govern-ment both donate to the InternationalReconstruction Fund Facility for Iraq(IRFFI) set up under the United Nationsand the World Bank. In addition to

EU Relations With The United StatesFrom the Leaders

“EU-U.S. relations have strengthened considerably,…and we are working together systemati-cally to address common economic, political, and environmental challenges. With sharedvalues and interests, the EU and the U.S. are natural partners to take the lead.”—European Commission President José Manuel Barroso, EU-U.S. Summit, June 21, 2006

“The relationship between the United States and Europe is the world’s strongest, most com-prehensive, and strategically important partnership. The United States, a united Europe, this isreally the indispensable partnership.”—European Commission President José Manuel Barroso, February 22, 2005.

“This partnership is based on common values and shared aspirations; a partnership that reallyhas helped build a Europe that is whole, free, and at peace. The United States continues tosupport a strong European Union as a partner in spreading freedom and democracy andsecurity and prosperity throughout the world…. [W]e want Europe strong so we can worktogether to achieve important objectives and important goals.”—U.S. President George W. Bush, EU-U.S. Summit Washington, D.C., June 20, 2005

The EU and the U.S.—Deep Integration

“56 percent of total U.S. foreign direct investment went to Europe during 2000—2005.Europe accounted for half of total global sales, more than double the comparable figures forthe Asia/Pacific region.”

“75 percent of total European foreign direct investment went to the US during 2000—2005.There is far more European investment in Texas alone than all U.S. investment in Japan andChina put together.”

“While U.S. foreign affiliate sales in China have skyrocketed, they have done so from a verylow base, and still remain very far below comparable sales in Europe (sales of $48 billion inChina in 2002 were lower than sales of $57 billion to Spain and well below sales of $242billion to Germany and sales of $140 billion to France).”

“Deep Integration: How Transatlantic Markets Are Leading Globalization,” Johns HopkinsUniversity School of Advanced International Studies & Center for European Policy Studies



financial resources, the EU and the U.S.contribute technical expertise and anunbending commitment to the principlesof democracy and freedom. In 2006, theEuropean Commission opened a represen-tation in Baghdad in further support of itscommitment to Iraq.

Differing Approaches to Some IssuesTo be sure, differences exist, just as theywill between any partners. Differingpositions on the U.S. death penalty andcertain trade disagreements are among themost visible. Ninety-eight percent ofeconomic relations between the twopartners, however, are dispute-free. The EUand the U.S. share an overarching commit-ment to the democratic values thatunderpin their respective ways of life.These values are reinforced through themyriad transatlantic interactions that takeplace daily among government officials,business leaders, non-governmental organizations, professional associations,academia, civil society, and ordinarycitizens, and they are represented on theworld stage through common actions in avariety of policy fields.

Structure of Transatlantic RelationsTransatlantic relations encompass morethan EU-U.S. relations. The United Statesand many EU countries provide for theircommon security in the North AtlanticTreaty Organization (NATO). The U.S. alsomaintains strong political, economic, and

cultural relations with many individualEuropean nations, EU and non-EUcountries alike. The European Union andthe United States hold regular presidentialsummits, which were launched with the1990 Transatlantic Declaration that formal-ized U.S. relations with what is now the EU.

The emergence of an EU CommonForeign and Security Policy in 1993 furthersolidified the relationship by providing the

Chapter ThreeEU Relations With The United States

Promoting EU Studies in the U.S.:EU Centers of Excellence

The EU supports a network of centers atleading universities across the United Statesto promote the study of the EU, its institutionsand policies, and to foster EU-U.S. relationsthrough teaching programs, scholarlyresearch, and outreach activities. The EUfunds this initiative as part of a broadereffort to promote the people-to-people tiesspelled out in the New TransatlanticAgenda. The centers are located at:

Florida International University and theUniversity of Miami

Indiana University

University of Michigan

University of North Carolina at Chapel Hill

University of Pittsburgh

Syracuse University

Texas A&M University

University of Washington at Seattle

University of Wisconsin at Madison

Washington, D.C., Consortium (AmericanUniversity, George Mason University,The George Washington University,Georgetown University, The JohnsHopkins University)

The EU Presence in the U.S.

The European Union has a permanent presence in the United States with delegations inWashington, D.C. and New York City. The Washington office was opened in 1954 at the veryoutset of the six-nation European Coal and Steel Community that would become the EU. TheWashington office, the Community’s first overseas presence, opened with two Americansoccupying two rooms. It now operates with a staff of more than 80 professionals and serves asthe EU’s representation to the U.S. government and as an information conduit to Washingtonand the rest of the United States. It is a diplomatic mission but does not have functions such asconsular or military affairs that attach to a standard embassy.

The New York office was established in 1964 and became the delegation to the United Nationsin 1974.

The U.S. government has a permanent presence before the EU in Brussels, home to most of theprincipal EU institutions.

Leaders at June 2005 EU-U.S. Summit: (L to R) Javier Solana, EUHigh Representative for the Common Foreign and Security Policy;Jean-Claude Juncker, Luxembourg Prime Minister & then-Presidentof the European Council; U.S. President George W. Bush; EuropeanCommission President José Manuel Barroso.



Chapter Four

United States with a stronger partner inareas beyond trade matters. An additionalstep was taken at the EU-U.S. Summit inDecember 1995 with the adoption of theNew Transatlantic Agenda (NTA), whichprovided a new framework for the partner-ship to deal with the growing number ofexternal challenges. The relationshipmoved from one of consultation to one ofjoint action in four major fields:• Promoting peace, stability, democracy,

and development.• Responding to global challenges.• Contributing to the liberalization and

expansion of world trade.• Improving communication and ensuring a

long-term commitment to the partnership.

The NTA was accompanied by a JointEU-U.S. Action Plan setting out specificactions ranging from promoting politicaland economic reform in Ukraine tocombating AIDS; from reducing barriers totransatlantic trade and investment topromoting links between universities andprofessional associations.

Within the NTA framework, theTransatlantic Economic Partnership (TEP)serves to intensify and extend multilateraland bilateral cooperation and commonactions in the field of trade and investment.The TEP sets out a plan identifying areasfor common actions with a timetable forachieving specific results. Since the NTAwas adopted, the EU and the United States

have made good progress in implementingthe agreed-upon actions. For example,trade barriers have been reduced, and bothsides work together on customs procedures.

The EU and the United States alsocooperate outside the NTA framework toimprove the dialogue between EU andU.S. regulators and provide companies,consumers, and government authorities ofboth parties access to each other’s regula-tory procedures.

The 2006 EU-U.S. Summit set up an EU-U.S. High Level Dialogue on ClimateChange, Clean Energy, and SustainableDevelopment. The Summit also reviewedcontinued progress in eliminating impedi-ments to further economic integration.

Chapter ThreeEU Relations With The United States

“People-to-People”Transatlantic Outreach

Several channels afford private sector and government leaders the opportunity to participate inpolicy development that affects both the EU and U.S.

Transatlantic Business Dialogue (TABD)The TABD’s goal is to help establish a barrier-free transatlantic market which will serve as acatalyst for global trade liberalization and prosperity. Unified markets are needed to create abusiness environment that will stimulate innovation, economic growth, and more investment aswell as create new jobs. TABD members include leading American and European companiesboth large and small and with strong transatlantic credentials. The TABD is convened by theU.S. Administration and the European Commission.

Transatlantic Consumers’ Dialogue (TACD)The TACD is a forum of EU and U.S. consumer organizations that develops joint consumerpolicy recommendations and works to promote consumer interest in EU and U.S. policy-making. TACD conferences take place once a year, alternately in the U.S. and the EU andproduce recommendations related to food, electronic commerce, trade, health, and intellec-tual property issues.

Transatlantic Legislators’ Dialogue (TLD)The TLD Dialogue involves biannual meetings of the European Parliament and U.S.Congressional delegations along with a series of teleconferences organized on specific topicsof mutual concern with a view to fostering an ongoing and uninterrupted dialogue.

(above) The U.S. has been a strong supporter of Europeanintegration since its inception in the early 1950s.

(below) Meeting of the Transatlantic Business Dialogue, June 2005.



EnlargementOn January 1, 2007, Bulgaria and Romaniajoined the European Union, completingthe historic fifth enlargement. It was amomentous achievement, symbolizingEurope’s unification after 50 years of artifi-cial division and one which created a newpolitical order based on common valuesand a shared desire to construct a space ofstability, security, and prosperity.

Eight countries from Central andEastern Europe, along with Cyprus andMalta, acceded to the EU on May 1, 2004,when the European Union enlarged from15 to 25 member countries, in the firstpart of the fifth enlargement, the largestin EU history. The EU invested more than$85 billion between 1990 and 1999 tosupport the new Member States duringthe accession process, approximately whatthe U.S. Marshall Plan provided to aid thereconstruction of Europe after World WarII. Previous enlargements occurred in1973 (Denmark, Ireland, and the UnitedKingdom), 1981 (Greece), 1986 (Spainand Portugal), and 1995 (Austria, Finland,and Sweden).

EU enlargement is a historic step towardthe long-cherished goal, supported by allU.S. presidents since Eisenhower, of aEurope “whole, free, at peace, and growingin prosperity.”

Any European state which respects theprinciples upon which the EuropeanUnion is founded may apply to become amember of the Union. As stated in ArticleSix of the Treaty on European Union: “TheUnion is founded on the principles of liberty,democracy, respect for human rights, andfundamental freedoms, and the rule of law,principles which are common to theMember States.”

TurkeyTurkey’s formal relations with the EU dateback to the 1963 Turkish AssociationAgreement—the Ankara Agreement—which envisioned closer relations through acustoms union, closer economic and tradeties, and eventual membership. Thecustoms union, which allows most goods to

cross the border in both directions withoutcustoms restrictions, was finally realized in1995, jump-starting bilateral trade, whichhas increased fivefold subsequently.

Turkey attained candidate countrystatus in 1999, and accession negotiationsbegan in late 2005. The country hasundertaken notable political and humanrights reforms: abolition of the deathpenalty; increased civilian control of themilitary; abolition of State SecurityCourts; recognition of the supremacy ofinternational human rights conventionsover domestic law; progress in the fightagainst torture; and greater genderequality in the constitution and civil code.

Turkey benefits from considerable pre-accession assistance for infrastructure andsocial improvements—€500 million in2006, in addition to more than €1.5billion between 1996-2005 to supporteducation, training, environmental/infra-structure initiatives, and economicreform. The EU has also introduced €259million in aid and trade measuresdesigned to encourage the economicdevelopment of the Turkish Cypriotcommunity and help facilitate the reunifi-cation of the island.

In December 2006, the EU decided todelay the opening of certain “chapters”(subject areas) of the accession negotia-

tions with Turkey pending Turkey’s com-pliance with an “Additional Protocol” tothe Ankara Agreement, under whichTurkey agreed to open its ports andairports to goods transported from theRepublic of Cyprus, an EU Member State.Turkey’s screening process continues andnegotiations on other chapters will beopened when ready, but no negotiationscan be concluded without resolution ofthe outstanding issue related to theAdditional Protocol.

The EU is committed to keepingTurkey’s accession negotiations on track,even if at a somewhat slower speed.Turkey stands both as an anchor ofstability in one of the most unstable andinsecure regions in the world and as abenchmark of democracy for the widerMiddle East.

CroatiaTwelve years after the end of the war inCroatia and eight years after gaining fullsovereignty, EU candidate country Croatiais a stable democracy with a functioningmarket economy. Having concluded aStabilization and Association Agreement(SAA) with the EU in 2001 to governrelations until accession, includingfinancial and technical assistance gearedtoward helping the country fulfill the


Chapter Four

Copenhagen Criteria

Any European country that adheres tothe following principles is consideredeligible for membership in the EU:

1. Democracy, the rule of law, humanrights, respect for minorities

2. A functioning market economy andthe capacity to cope with competitivepressures

3. The ability to apply the EU’s rules andpolicies (known as the acquis com-munautaire)


Europe Whole and Free: The EU ProjectingPeace, Stability, and Prosperity



requirements for EU membership, Croatiapresented its application in 2003 and wasaccepted as a candidate country the nextyear. Negotiations were launched onOctober 3, 2005.

Progress reports show continuingimprovement in Croatia’s political system,progress with human rights and protec-tion of minorities, and good medium-term economic prospects, providedreform continues. Judicial reform andanti-corruption efforts are of paramountimportance, both being essential to a well-functioning democracy and a healthyeconomy attractive to foreign investment.

Former Yugoslav Republic ofMacedonia (FYROM)FYROM became a candidate country inDecember 2005 and is well on its way tosatisfying the political criteria for EUmembership. It is a functioning democracy,with stable institutions that generallyguarantee the rule of law and respect forhuman rights. Additional work is necessaryto improve the electoral process,implement judicial and police reform, andstrengthen anti-corruption efforts.

The country has made major stridestoward establishing a functioning marketeconomy, and economic reformcontinues, particularly in the areas ofproperty ownership, the business andinvestment climate, and labor andfinancial markets.

Like Croatia, FYROM enjoys aStabilization and Association Agreementwith the EU, including financial andtechnical assistance.

European Neighborhood PolicyThe EU launched the EuropeanNeighborhood Policy (ENP) in 2004 topromote democracy, economic develop-ment, stability, and security in thecountries around the borders of theexpanded EU. The idea was to create aring of friends with the Union’simmediate neighbors and to avoid theemergence of new dividing lines betweenthe enlarged EU and its neighbors.

Through agreed upon programs offinancial and technical support, the EUprovides incentives for political andeconomic reform in neighborhood

countries, including access to the Union’ssingle market, closer energy and trans-portation links, and a chance to partici-pate in certain internal EU programs.ENP is helping countries strengthen therule of law, democracy, and respect forhuman rights, while enabling market-oriented economic reforms.

Distinct from the enlargement process(although eventual membership is notprecluded for otherwise qualifiedEuropean states), ENP includes thefollowing EU “neighbors”: Algeria,Armenia, Azerbaijan, Belarus, Egypt,Georgia, Israel, Jordan, Lebanon, Libya,Moldova, Morocco, the PalestinianAuthority, Syria, Tunisia, and Ukraine.

Southeast EuropeThe EU is working in Southeast Europe tohelp the region achieve peace, stability,prosperity, and freedom. Through theStabilization and Association Process(SAP), which includes the prospect of EUmembership, the Union is working tostrengthen democracy and speed the tran-sition to market economies (including,eventually, a free trade area), while alsopromoting regional cooperation.

The SAP provides the framework for EUrelations with the Western Balkancountries, and the Union has offered theprospect of full EU membership to sixBalkan countries—Albania, Bosnia-Herzegovina, Croatia, the FormerYugoslav Republic of Macedonia


Chapter FourEurope Whole and Free: the EU Projecting Peace, Stability, and Prosperity

“The European Neighborhood Policy isan opportunity for us, and our partners,to share the benefits which we havederived from half a century of peacefulintegration.”Benita Ferrero-Waldner, Commissioner

for External Relations and EuropeanNeighborhood Policy

5


(FYROM), Montenegro, and Serbia—ifmembership criteria are met. Croatia isthe first of the Western Balkan countriesto be granted candidate status, followedby the Former Yugoslav Republic ofMacedonia.

Individual Stabilization and AssociationAgreements provide the vehicle for a mixof trade concessions and EU economicand technical assistance designed to helpthe EU’s Balkan neighbors build capacityand adapt to European standards,including the EU acquis communautaire—the full body of EU laws and policies—asrequired for eventual EU membership.

The EU is by far the single largest assis-tance donor to the Western Balkans as awhole. The EU has invested billions ofeuros in financial aid and has establishednumerous security, economic develop-ment, and law enforcement programs tohelp countries in the region rebuild theireconomies and rejoin the mainstream ofEuropean development.

The EU and its Member States also lead onthe ground, having committed thousands oftroops and military police, the lion’s share ofthe international force, to peacekeeping andrelief missions in the region.

Kosovo (under United Nations SecurityCouncil Resolution 1244). The EU is verysupportive of the UN administration inKosovo, and provides technical expertiseand an EU representative to the Kosovofuture status process. The EU wants toensure that the status process succeedsand leads to a clear sustainable settlementthat includes a multiethnic and democrat-ic Kosovo. The EU is also advising on

economic and EU matters to ensure com-patibility with the EU’s Copenhagencriteria for membership. As of early 2007,with the UN status proposal approaching,the EU was preparing for a possible Ruleof Law mission (focusing on police andjudicial reform) and continuing tosupport economic reform.

Russia Working within a Partnership andCooperation Agreement (PCA), whichcame into force in December 1997 for aninitial period of 10 years (to be automati-cally extended year to year, barring with-drawal of either partner from theagreement), the EU and Russia agreed to aset of shared principles and objectives: thepromotion of international peace andsecurity, and support for democratic normsand political and economic freedoms.

The provisions of the PCA cover a widerange of policy areas, including politicaldialogue; trade in goods and services;business and investment; financial andlegislative cooperation; science and tech-nology; education and training; energy,nuclear, and space cooperation; environ-ment; transport; culture; and cooperationon the prevention of illegal activities. Theagreement also paves the way for theeventual establishment of an EU-Russiafree trade area.

Within the PCA framework, a set ofactions, or roadmaps, have been agreedupon to bring about four “commonspaces”: creation of an open and integrat-ed market; promotion of freedom,security, and justice; cooperation on

foreign policy and security issues withrecognition of the importance of interna-tional organizations; and cooperation onscientific, educational, and cultural issues.

At the November 2006 EU-Russiasummit, leaders discussed a number ofissues, including joint action to improvethe bilateral business and investmentenvironment in order to exploit the fullpotential of economic relations. The EUand Russia agreed that the energy sectorneeds to function in a transparent, pre-dictable way, based on a positive interde-pendence and reciprocity. The partnersexpressed satisfaction with a strengthenedenvironmental dialogue, which will pavethe way for comprehensive cooperation inthis sector.

The EU is Russia’s number one tradingpartner, accounting for more than 52percent of its overall trade. Total EU tradewith Russia in 2005 increased by 20percent and reached $206 billion.

Eastern Europe/Central AsiaThe EU is committed to working with thecountries of Eastern Europe and CentralAsia to support their political andeconomic transformation. Partnershipand Cooperation Agreements (PCAs)constitute the framework for the relationsbetween the EU and those countries. ThePCAs, with an initial lifespan of 10 years,are legal frameworks based on respect fordemocratic principles and human rights,setting out the political, economic, andtrade relationship between the EU and itspartner countries. The EU has concludedPCAs with Armenia, Azerbaijan, Belarus,

Georgia, Kazakhstan, the Kyrgyz Republic,Moldova, Tajikistan, Turkmenistan,Ukraine, and Uzbekistan. The PCAs withBelarus and Turkmenistan were never putinto force in light of those countries’ poorrecords on political reforms.

EFTA and the EEAMembers of the European Free TradeAssociation (EFTA)—Norway, Iceland,Liechtenstein, and Switzerland—havechosen not to become part of the Union.In referenda in 1973 and 1994, Norwaydecided against EU membership;Switzerland has applied for EU member-ship in the past, but has not activelypursued it, choosing instead to concludeagreements in specific policy sectorsincluding transport, the environment, freemovement of people, procurement,research, agricultural trade, and conformi-ty assessment.

As members of the 1994 EuropeanEconomic Area (EEA), Norway, Iceland,and Liechtenstein participate in the EU’sinternal market while not assuming the fullresponsibilities of EU membership. In 1992Swiss voters rejected ratification of the EEAagreement, which deals principally with the“the four freedoms”: free movement ofgoods, persons, services, and capital.Provisions in the areas of social policy,consumer protection, environment,company law, and statistical harmonizationcomplete the extended internal market.

The competition rules of the EEAAgreement cover cartels, abuse ofdominant positions, merger control, statemonopolies, and state aid.


Chapter FourEurope Whole and Free: the EU Projecting Peace, Stability, and Prosperity


Since its inception, the EU has developed anetwork of bilateral and multilateral agree-ments with most countries and regions,continually expanding and deepeningrelations with its global partners. As amajor global actor–demonstrated by itsrole as the largest single market in theworld, its deep relations with nations, andits long-standing commitment to develop-ment aid–the EU is at the forefront ofpromoting sustainable development,freedom, democracy, and the fight againstpoverty. Moreover, the European Unionplays an increased role in world affairs withthe establishment of the Common Foreignand Security Policy (CFSP) and theEuropean Security and Defense Policy(ESDP), which allow for better response tothe far-reaching economic and politicalchanges occurring on the EU’s doorstep,and in other parts of the world, thatrequire coherent European action.

The EU holds regular summit meetingswith partners such as the United States,Japan, and Canada, and more recently withRussia, Ukraine, India, and China. TheUnion also holds regional dialogues withother countries in Asia, the Mediterranean,the Middle East, and Latin America. Theserelationships, focused initially on tradeissues, have expanded over the years tocover investment, economic cooperation,finance, energy, science and technology, andenvironmental protection, as well as the

global war on terror, international crimeand drug trafficking, and human rights.

The Union’s responsibilities stretch fromhelping to run the civil administration inKosovo and providing financial supportfor the Palestinian Authority to imple-menting reconstruction programs inAfghanistan and Iraq.

Common Foreign and SecurityPolicy (CFSP)Asserting the EU’s New Role in the WorldThe Common Foreign and Security Policy(CFSP), established in 1993 when theMaastricht Treaty took effect, provides aformal structure that allows Member Statesto coordinate policy that is consistent andasserts the EU’s inherent political identity.Its objectives are to safeguard the values,interests, independence, and integrity of theUnion; to strengthen the Union’s security; topreserve peace and strengthen internationalsecurity; to promote international coopera-tion; to develop and consolidate democracyand the rule of law, and respect for humanrights and fundamental freedoms. Thepolicy calls for adherence to the UN Charterin accomplishing those goals.

Although CFSP decision–making proce-dures are intergovernmental, all the EU’smajor institutions have roles under CFSP.The European Commission, which is fullyassociated with the CFSP, participates in all

discussions, can make proposals, and canlaunch its own initiatives. It also representsEU interests around the world through itsdelegations and, with the Council of theEuropean Union, ensures consistency in theEU’s external relations. The Council isresponsible for foreign policy within theCFSP framework, defining policy principlesand general guidelines, deciding oncommon strategies for activities with indi-vidual countries, and adopting joint actionsand common positions. The EuropeanParliament is consulted regularly, althoughit has no direct powers in this realm.

The European Union’s HighRepresentative, currently Javier Solana,contributes to the formulation of theCommon Foreign and Security Policy,along with the EU Presidency. The PolicyUnit—part of the Secretariat of theCouncil of the EU—is charged with mon-itoring, analyzing, and assessing interna-tional developments and events.

The European Council, consisting ofHeads of State and Government, agreeson common strategies and objectives inareas where Member States share interests;foreign ministers of the Member Statesdecide the specifics.

Member States not willing to participatein a particular foreign policy or securityaction may opt out without holding backthe rest of the Union through a processcalled “constructive abstention.”

European Security and Defense Policy(ESDP) EU leaders decided in 1999 to put in placedecision-making procedures for an EUSecurity and Defense Policy within therealm of CFSP and to develop capacitiesto undertake security-related operations,such as peacekeeping, monitoring, andconflict prevention.


Chapter Five

Europe in the World European Security Strategy

Spurred by increasing global securitythreats, the European Union put in placein 2003 a European Security Strategydefining how the Union and its MemberStates would bring together their manycapabilities to help improve securityglobally. This was done under theCommon Foreign and Security Policy(CFSP), which allows the Union to takejoint action in foreign and security affairs.

The Security Strategy sets out threeobjectives: to address security threats,noting that the most serious threatsinclude terrorism, nuclear proliferation,failed states, and regional conflicts; tobuild security in the European neighbor-hood and “a ring of well governedcountries” along the EU’s borders; and tosupport multilateralism.

The EU has applied this strategy invarious ways, including counterterroristactivities and deployments of soldiersand police to promote stabilization.

The strategy calls for coordination of aidprograms, military capabilities, and diplo-matic, development, trade, and environ-mental policies to support the EuropeanSecurity and Defense Policy (ESDP),created in 2000.


ESDP Operations ESDP missions include humanitarian andrelief work, peacekeeping, and the use ofcombat forces in crisis management. Since2003, more than fifteen ESDP operationshave been launched, including militaryand police missions, rule of law missions,and civilian-military support action.These operations have been undertaken inBosnia and Herzegovina and the FormerYugoslav Republic of Macedonia. ESDPoperations are also underway in theMiddle East, Africa, Southeast Asia, andthe South Caucasus, while in early 2007,planning was underway for a possible EUmission in Kosovo.

Within ESDP, there is:• A Political and Security Committee (PSC)

(also known by its French acronym COPS)to help the Council monitor internationalevents and review policy options.

• The Military Committee of the EuropeanUnion (EUMC), composed of MemberState chiefs of defense staff or their repre-sentatives.

• The European Union Military Staff(EUMS), drawn from Member Stateservice personnel.

• The EU Satellite Center (EUSC), whichgenerates and analyzes data from spaceimagery.

• The EU Institute for Security Studies(EUISS), which performs research andanalysis.

• The European Defense Agency (EDA).The EDA was launched in 2004 to help

Member States improve their defense capa-bilities and to support the ESDP. The EDAcoordinates and fosters cooperationrelating to Member States’ defense capabili-ties development, armaments, theEuropean defense technological and indus-trial base and equipment market, andresearch and technology. All Member Statesexcept Denmark participate.

For the EU Member States in the NorthAtlantic Treaty Organization, NATOremains the basis for collective defense. Insecurity operations where NATO is notengaged, the EU can use NATO assets inaddition to those of EU Member States.The two organizations have several institu-tional mechanisms to provide for closeconsultations.

The EU and NATOThe European Union and the NorthAtlantic Treaty Organization—to which 21of the 27 Member States belong—havebuilt a genuine strategic partnership withthe shared goal of regional stability andpeace. The “Berlin Plus” arrangements,adopted in 1999, provide the frameworkfor cooperation between the EU andNATO. These arrangements includegranting the EU access to NATO opera-tional planning assets when it is leadingcrisis management operations; availabilityto the EU of NATO capabilities andcommon assets; NATO Europeancommand options for EU-led operations;and having NATO include in its defense

planning the possibility of making itsforces available for EU operations.

The “Berlin Plus” arrangements were thefoundation for the landmark 2002Declaration on the European Security andDefense Policy (ESDP) between the EUand NATO. That Declaration served as thebasis for EU-NATO cooperation on crisismanagement, anti-terrorism efforts,curbing proliferation of weapons of massdestruction, and ensuring EU access toNATO’s planning capability.

In March 2003, the EU and NATO signedthe NATO-EU Agreement on the Security

of Information, an agreement that enabledfull consultations and cooperation betweenthe two organizations, including theexchange of classified information andrelated material.

The culmination of those agreementswas the EU’s assumption on March 31,2003, of NATO’s mission in the FormerYugoslav Republic of Macedonia. CalledOperation Concordia, the deployment ofabout 400 troops from EU Member Statesand other nations marked the first time theUnion led a military mission. TheEuropean Union again relieved a NATO


Chapter FiveEurope in the World

The Rapid Reaction Mechanism: Providing Aid Quickly and Effectively

The EU decided in 2001 to set up a special emergency fund to respond quickly to the needs ofcountries undergoing crisis or moving toward crisis. The fund, known as the Rapid ReactionMechanism (RRM), provides flexible short-term support to safeguard or re-establish conditions ofstability in the partner countries. Its annual budget of €30 million finances actions for a maximumof six months with the idea that longer-term aid can then take over.

The RRM can intervene immediately prior, during, and after a crisis. At any one time, the RRMmay be supporting over 60 operations in countries across the globe. The scale and nature of thecrisis defines the type of actions that are funded.

It can send technical teams to assess the situation in a country during a crisis—as happened inAfghanistan—before deciding on long-term aid. It can fund mine clearance, the cost of mediationand peace talks, and the training of police as part of an effort to restore the rule of law. It canmonitor elections, consolidate and build up civilian administrations, help soldiers return to civilianlife, rebuild houses, schools, hospitals, bridges and roads and contribute to the strategic planningof the economic, administrative and social rebuilding of the affected countries.

The RRM can also step in to help countries deal with natural or man-made disasters and can beused either for one-time actions or to kickstart longer-term projects or programs. In affectedcountries, it works through NGOs, international organizations, and individual experts. It can alsomobilize the resources of EU Member States’ public administrations.

The RRM differs from the EU’s humanitarian aid which is politically neutral and directed to individu-als. RRM efforts have the clear aim to rebuild or establish civic structures without which, there canbe no political, social, or economic stability. As such, its operations support the EU’s political priori-ties and seek to defuse crises, opening the way for the political process and longer-term support.

(right) EU peacekeepers in the Balkans.

(far right) Javier Solana, EU HighRepresentative for the Common

Foreign and Security Policy.


force in 2004, this time in Bosnia andHerzegovina.

Cooperation between the EU and NATOis likely to grow in the future. NATOSecretary General Jaap de Hoop Scheffercalled for an expanded relationship in 2004,as both organizations were adding newMember States: “Ever since the end of theCold War, NATO and the European Unionhave worked together on a wider range ofissues, and to greater effect. Today, we face arange of new and complex challenges thatforce us to do even better: To work in atruly pragmatic manner—by complement-ing and reinforcing each other’s efforts.”

Foreign Aid and DevelopmentThe European Union has been active indevelopment cooperation from itsinception in the late 1950s. The goals of EUdevelopment policy, enshrined in the Treatyestablishing the European Community, areto foster sustainable economic and socialdevelopment; promote recipient nations’integration into the world economy; and tofight poverty and HIV/AIDS. EU policesalso aim to help consolidate democracy, therule of law, and respect for human rightsand fundamental freedoms.

The European Commission and the EUMember States combined constitute the

world’s largest single donor in the struggleagainst poverty. The massive Europeancommitment to development, over $55billion in 2005, accounts for more than halfof all official development aid to more than160 countries spanning the globe from theEU’s neighbors to Africa, the Middle East,

Latin America, and Asia. The 2000 CotonouPartnership Agreement (and its predeces-sors) with 79 African, Caribbean, and Pacific(ACP) countries is a prime example,combining aid, trade, and political dialogue.ACP exports are granted preferential accessto the EU market. In 2008, reciprocal tradeand economic partnership agreements(EPAs) with regional groups of countrieswill be concluded. Aid is tied to institutionalreforms and the recipient country’s ownlong-term development efforts and achieve-ments. Building on the experience thatownership by EU partner countries ispivotal for the efficiency and sustainabilityof all initiatives, the EU-funded programsare based on the countries’ own strategies toreduce poverty, wherever possible.

Additionally, the EU is a leading donorof emergency and humanitarian aid. TheEuropean Commission Humanitarian AidOffice (ECHO) provides food, medicalsupplies, water purification systems,shelter and other essential items todisaster victims around the world. It hasoperated in 85 countries since it wascreated in 1992, providing more than €5billion in emergency assistance.

Funding To improve aid quality and efficiency, theEuropean Commission has replaced acomplex web of funding mechanisms witha simpler, more efficient system, as of2007. The new framework is comprised ofsix instruments, three of them policy-driven and three of them thematic:• The Pre-Accession Instrument (IPA) for

current and future EU candidatecountries, e.g., Turkey, Croatia, FYROM,and other potential candidate countriesin the Western Balkans.

• The European Neighborhood andPartnership Instrument (ENPI) forcountries covered by the EuropeanNeighborhood Policy and also Russia(which benefited from TACIS).

• The Development Cooperation andEconomic Cooperation Instrument(DCECI) for all countries, territories,and regions not eligible for assistanceunder either the Pre-AccessionInstrument or the EuropeanNeighborhood and PartnershipInstrument.

• Macro-Financial Assistance (MFA) foreconomic stabilization and structuralreform in beneficiary countries. In closecoordination with IMF and World Bankprograms, MFA promotes policies thatare tailored to specific country needswith the overall objective of stabilizingthe financial situation and establishingcompetitive, market-orientedeconomies.

• The Instrument for Stability (IfS) forproviding a timely, effective, and inte-grated response to crisis in non-EUcountries, and addressing global andtrans-regional issues such as nuclearsafety and non-proliferation, trafficking,organized crime, and terrorism.

• The Humanitarian Aid Instrument forhumanitarian assistance, including foodaid (dealt with previously under aseparate instrument).



EU High Representative Javier Solana and UN Secretary General Ban Ki-moon.

African Peace Facility

Peace in Africa is a precondition forthe continent’s development and isalso essential for Europe’s security.The EU is the main donor to UN peaceoperations in Africa. It is also Africa’sbiggest trading partner and largestdonor, providing more than 50 percentof development aid to the region. Inaddition, the European Commissioncreated the €250 million African PeaceFacility to provide the African Unionand other regional organizations withthe resources to mount effectivepeacemaking and peacekeeping operations.


EU Relations with MultilateralOrganizations The EU and the United Nations In addition to the active participation ofthe EU Member States, the EuropeanUnion has been a permanent observer atthe United Nations since the mid-1970s.Both the EU and the UN share commongoals in encouraging international peaceand humanitarian development. The EUhas joined the UN in a number ofprograms promoting international peaceand security; developing stronger relationsamong nations; and cooperating in solvinginternational, economic, social, cultural,human rights, trade, and humanitarianproblems. As with the transatlantic part-nership, the EU-UN relationship willbecome increasingly important as a resultof the EU’s political development.

The EU contributes to the entirespectrum of UN programs, includingdevelopment policy, peacemaking,humanitarian assistance, environment,human rights, and culture. The EUMember States are the largest financialcontributor to the UN system, providingabout 37 percent of the UN’s regularbudget compared to the 23 percentexpended by the United States. The EUcontributes 40 percent to UN peacekeep-ing operations and 50 percent to UNfunds and operations.

The EU has been a full participant inmany major UN conferences, notably the1995 Copenhagen World Summit forSocial Development, the 1995 BeijingWorld Conference on Women, the 2002Monterrey Conference on Finance for

Development, and the 2002 JohannesburgWorld Summit for SustainableDevelopment. In May 2001, the EU for thefirst time hosted a major UN conference—the Third UN Conference on the LeastDeveloped Countries.

In 2003, the UN and the Commissionconcluded an agreement on the financingor co-financing of UN projects, a pact thatsubstantially simplifies and accelerates theconclusion of grant agreements betweenthe two organizations.

EU participation in UN activities reflectsthe Union’s deeply-rooted commitment tomaking effective multilateralism a centralelement of its external action.

Since the 1993 establishment of the EU’sCommon Foreign and Security Policy, EUMember States have moved increasinglytoward coordinating their actions in inter-national organizations. At the UN, theMember States, together with theEuropean Commission, consult regularlyand aim for unanimity. In fact, they havestood together on about 95 percent of allresolutions passed by the UN GeneralAssembly since the mid-1990s.

EU Member States represent one-eighthof the votes in the UN General Assemblyand one-third of the UN Security Council’smembership.

The European Commission has delega-tions at all major UN sites: New York,Geneva, Vienna, Rome, Paris, and Nairobi.The European Commission’s ExternalRelations and Development Directorates-General coordinate relations between theCommission and the UN, while many ofthe sectoral Directorates-General also have

close working relations with individual UNbodies in their areas of responsibility.

The EU and the World TradeOrganization The EU was deeply involved in trade nego-tiations under the General Agreement onTariffs and Trade’s (GATT) UruguayRound, implemented in 1995, whichincluded the creation of the World TradeOrganization (WTO). The European Unionis one of the key players in the WTO,because the EU has a common trade policy,where the European Commission negoti-ates on behalf of the Union’s 27 MemberStates. As such, the EU is one of the drivingforces behind the current round of multi-lateral trade negotiations in the WTO, theDoha Development Agenda (DDA). TheDDA comprises both further marketopening and additional rule-making,underpinned by commitments to takemeasures necessary to integrate developingcountries into the world trading system,notably by strengthening assistance to buildcapacity. The main objective of the DDA

Round is to put development at the heart ofthe world trade system in a way that willhelp developing countries combat poverty.

Regions of the World The Mediterranean Region and theMiddle East The Mediterranean region is of highstrategic importance to the EU. The Euro-Mediterranean Conference of Ministers ofForeign Affairs, held in Barcelona onNovember 27-28, 1995, marked thestarting point of the Euro-MediterraneanPartnership (Barcelona Process), a wideframework of political, economic, andsocial relations between the Member Statesof the European Union and partners of theSouthern Mediterranean. The 2004 EUenlargement gave Member State status totwo Mediterranean members of the part-nership—Cyprus and Malta. The ten fullEuromed partners are Algeria, Egypt,Israel, Jordan, Lebanon, Morocco, thePalestinian Authority, Syria, Tunisia, andTurkey. Libya has observer status.

As the cornerstone of a new regional



Supporting the Middle East Peace Process

The EU is firmly committed to the objective of two States, Israel and a democratic, viablePalestine, living side-by-side in peace and security, in the framework of a comprehensive MiddleEast peace. With Russia, the United States, and the United Nations, the EU drafted the 2002“roadmap” of goals and timelines to encourage progress. In addition to diplomatic efforts, the EUalso supports or runs various civic, business, and social initiatives to promote peace andtolerance in the region.

The EU is the biggest donor to the Palestinians and the biggest trading partner and majoreconomic, scientific and research partner of Israel—the EU accounts for one-third of Israeliexports and over 40 percent of Israeli imports. It is also a major political and economic partnerof Syria, Lebanon, Jordan and Egypt.

Israel and the Palestinian Authority are partners in the EU’s European Neighborhood Policy, andhave agreed to action plans with commitments on issues relevant to the peace process.




(right) Afghan President Hamid Karzaiaddresses European Parliament.

(far right) Medical assistanceprogram in Baghdad.

relationship, the Barcelona Process hasthree main objectives: expanding thepolitical and security dialogue to create acommon area of peace and stability;sharing prosperity through an economicand financial partnership and the gradualestablishment of a free-trade area, envi-sioned by 2010; and encouraging under-standing between cultures and exchangeswithin civil society.

The EU also works closely with sixPersian Gulf nations that created theCooperation Council for the Arab States ofthe Gulf (GCC) in 1981. A free-tradeagreement is being discussed, as is increasedpolitical, economic, and social cooperation.

Afghanistan EU support for Afghanistan is set firmlywithin the context of an agreement

reached in Bonn by Afghan factions,assisted by the United Nations, shortly afterthe fall of the Taliban in late 2001. Theagreement spelled out a transitionalprocess leading to elections of a “broad-based, gender-sensitive, multi-ethnic, andfully representative government.”

In 2002 the Council of the EuropeanUnion set overall objectives to: restorestability; support civil, social, and militarystructures, and services and aid, especiallyfor refugees and displaced persons;promote economic and political reformsand the establishment of public institu-tions to protect human rights; reinforce thefight against illegal drugs and terrorism;and promote regional cooperation forreconstruction.

The EU has provided substantial aid toAfghanistan. Between 2002-2006, the EU

committed €1 billion to Afghanistan’s sta-bilization and recovery process and willcontinue to provide roughly €150 millionannually in the long-term. The EU is thelargest donor to the Law and Order TrustFund for Afghanistan (LOFTA), havingcontributed €135 million since 2002 tocover police salaries. The EU is a top con-tributor to the Afghan Reconstruction TrustFund (ARTF), and along with the WorldBank and the U.S., the EU has taken aleading role in developing the health sector.

During the period 2007-2013, the EUwill continue to focus on strengtheningthe rule of law as key to sustainable recon-struction, governance, and state buildingin Afghanistan. Additionally, the EU willcontinue to provide substantial aid,notably in health and rural development,including alternative livelihoods. Other

significant goals include de-mining, thesustainable return of refugees, expandingthe role of women, and reducing poppyproduction. In addition, the EU has madea significant contribution of personnel(almost two-thirds of the total deploy-ment) to the UN-mandated and NATO-commanded International SecurityAssistance Force (ISAF), established by aUN Security Council Resolution followingthe Bonn meeting.

IraqIn addition to the involvement of anumber of EU Member States in providingsecurity, the EU’s efforts in Iraq since thefall of Saddam Hussein in May 2003 havefocused on humanitarian relief andpolitical and financial support for recon-struction. The European Commission’s


humanitarian agency provided €100million in humanitarian assistance in 2003for the most vulnerable population in Iraq.In 2005, the EC also provided significantsupport for the electoral process.

Benita Ferrero-Waldner, Commissionerfor External Relations and EuropeanNeighborhood Policy, said in July 2005:“The Iraqi people have shown tremendouscourage and resilience.… We owe it tothem to show compassion and solidarity inreturn—with financial assistance but alsowith moral and political support.”

European Commission assistance to date(€720 million) represents a strong founda-tion for future EC engagement. Supportthus far has focused on three main areas:• restoring key public services (education

and health);• boosting employment and reducing

poverty;• strengthening governance, civil society,

and human rights, including strongsupport to the electoral process.In 2006, the European Commission

allocated a further €200 million to Iraq,with nearly €180 million dedicated to the

support of basic services.Negotiations were launched in November

2006 for an EU-Iraqi Trade andCooperation Agreement geared towardstrengthening the bilateral relationship andhelping to integrate Iraq into the worldeconomy.

The European Commission opened aDelegation in Baghdad in 2006.

Iran The EU has expressed its deep concernover Iran’s repeated failure to bring itsnuclear program into compliance with therequirements of the International AtomicEnergy Agency (IAEA) Board of Governorsand the UN Security Council. The EUwelcomed UN Security Council resolution1737, which called on Iran to comply withthe IAEA requests, stating, “This decisionrepresents a necessary and proportionateresponse to Iran’s disregard for theconcerns of the international communityand for Security Council resolution 1696.”

The EU reiterated its continuing supportfor efforts toward a negotiated long-termsolution, as well as for the EU High

Representative’s June 2006 proposal toIran, which could open the way for a newEU-Iran relationship based on mutualrespect and expanded cooperation.

The EU has conducted a multi-track,gradual, engagement policy with Iran,including the prospect of negotiations onan agreement encompassing crucialpolitical issues such as the promotion ofhuman rights, the fight against terrorism,the Middle East Peace Process, weapons ofmass destruction, and parallel, linkednegotiations on a possible Trade andCooperation agreement.

The EU-Iran bilateral Human RightsDialogue has been inactive since summer2004.

One of the EU policy goals is thepromotion of economic and social reformswithin Iran needed to facilitate thecountry’s re-integration with the interna-tional community.

Asia The EU proposed in 2001 to strengthen itspolitical and economic presence in Asia bybroadening engagement in the region,creating policies to improve mutual tradeand investment, promoting developmentin poorer nations, and promoting core EUvalues such as protection of human rightsand the spread of democracy.

At the 2004 summit between the EU and13 key Asian nations, representatives fromthe two continents agreed to strengthencoordination and cooperation within theEurope-Asia dialogue to address new chal-lenges such as instability, terrorism, prolif-eration of weapons of mass destruction,

economic inequality, disease, environmen-tal degradation, and climate change.

The EU also has regular dialogues onregional political and security issues withthe 10-nation Association of SoutheastAsian Nations (ASEAN) through theASEAN Regional Forum, established in1994. EU and ASEAN foreign ministershave met every other year since 1978.Results of the 2005 EU-ASEAN meetinginclude support for ASEAN integration bymaking available the enlarged EU’s ownexperience as a model; the start of negotia-tions on bilateral agreements withSingapore and Thailand; concrete jointcooperation in the fight against terrorism;marked progress under the TREATI (tradeinitiative); launch of trilateral cooperation;and a joint EU-ASEAN visibility strategy.

In 2005, the EU was ASEAN’s secondlargest export market, and third largesttrading partner, after the U.S. and Japan.

Asia is the No. 2 market for EU exportsbehind North America, with trade inservices an increasingly important element.A significant share of EU foreign invest-ment flows to Asia, while some Asiancountries are important investors in the EU.

ChinaThe EU and China account for one quarterof the world’s population. China is theworld’s fourth economic power, thirdbiggest exporter, and wields increasinginternational political clout. As Chinagrows, it is entering a new and challengingperiod of its economic and social reformprocess. Europe has a major political andeconomic stake in supporting China’s full



EU-China Summit,September 2005.


and successful transition into a prosperous,stable, and open country that embraces therule of law and free market principles.

Strategic partners since 2003, the EU andChina share a growing interest in workingtogether on key geo-political challenges,and in promoting sustainable development,peace, and prosperity for the benefit ofboth sides. The EU-China summit in 2006agreed to launch negotiations on a com-prehensive new Partnership andCooperation Agreement (PCA) that wouldencompass the full scope of EU-Chinarelations, including enhanced cooperationin political matters. This PCA will be thekey mechanism to move the partnershipforward, propelled by the EU’s ambitiousnew agenda for bilateral relations.

The EU’s new China strategy, introducedin 2006, responds to China’s re-emergenceas a global economic and political power.

The EU approach is one of engagementand partnership—a closer strategic part-nership means increased mutual responsi-bilities. The initiative identifies as priori-ties: support for China’s transition towarda more open and pluralistic society; sus-tainable development, including EU-Chinese cooperation on energy, climatechange, and international development;strengthening bilateral cooperation in areasincluding science and technology andimmigration; and promoting internationalsecurity in East Asia and beyond, and inthe area of nuclear non-proliferation.

The new approach is accompanied by awide-ranging review and new strategy forbuilding the EU’s trade and investmentrelationship with China, reflecting thedramatic changes in EU-China trade andthe importance of managing China’smassive new weight in the global trading

system. The argument is that China’sgrowing trade muscle brings with it newresponsibilities to fulfill its WTO obliga-tions, open its markets, and trade fairly.The review sets out a range of strategiesfor improving the conditions on whichEU companies trade in China: bettermarket access, tougher action on intellec-tual property theft, and provision ofnew resources for business on the groundin China.

China is now the EU’s second largesttrading partner after the U.S., and the EU became China’s largest trading partnerin 2004.

IndiaEU relations with India have developed at aremarkable speed over the past several years.The deepening of the EU-India politicalpartnership is embedded in a strong institu-tional architecture, strengthened andenhanced continually as the relationshipevolves, marked by advances made at EU-India summits that have taken place since2000. At the 2006 EU-India summit, leadersdiscussed the implementation of the JointAction Plan and its role in further advancingbilateral trade and investment. The EU andIndia also agreed to intensify their coopera-tion in areas of mutual concern, fromclimate change and promoting multilateraltrade liberalization to nuclear non-prolif-eration, good governance, human rights,and the fight against terrorism.

The Joint Action Plan focuses in particu-lar on:• strengthening dialogue and consultation

mechanisms;

• deepening political dialogue and cooper-ation;

• bringing together people and cultures;• enhancing economic policy dialogue and

cooperation;• developing trade and investment.

The EU is India’s largest trading partner,accounting for one-fifth of India’s trade.Since 2001, bilateral trade has grown by anaverage of 11 percent. A growing area of EU-India trade is in services, which has increasedsignificantly in recent years. The EU is alsoboth the leading foreign investor in Indiaand a major destination for Indian investors.

JapanTo form a solid strategic partnership, theEU and Japan have agreed to a Joint ActionPlan with four key objectives: promotingpeace and security, enhancing trade,working together to tackle global chal-lenges, and bringing together people andcultures. Leaders at the 2006 EU-Japansummit agreed to strengthen the bilateralrelationship through implementation ofthis Joint Action Plan. Recent progress inthis arena includes the adoption of theInvestment Framework to foster growth intwo-way direct investment, joint participa-tion in the ITER project (research concern-ing the feasibility of fusion as a large-scaleenergy source), and signature of the Japan-Euratom agreement.

The EU values its existing cooperationwith Japan on a range of internationalissues, including Afghanistan, Iraq, and Iran,and hopes to strengthen political coopera-tion further. As democracies sharing thesame values and beliefs in the rule of law,



African UnionPresident AlphaOumar Konaré inBrussels with EUHigh RepresentativeJavier Solana andEuropeanCommissioner forDevelopment andHumanitarian AidLouis Michel.


human rights, and sustainable economicdevelopment, the EU and Japan togetherhave the potential to project joint interestsand ideals on a global scale.

Together Japan and the EU account for 40percent of global GDP and are both majoraid donors. When the EU and Japan worktogether, people listen. Closer collaborationbetween the two partners could make animportant contribution to the success of theDoha Development Agenda negotiationsand help to prepare the post-2012 multilat-eral regime to combat global warming.

Africa, Caribbean, and PacificThe EU maintains links to African,Caribbean, and Pacific (ACP) countries thatwere already in place at the Union’sinception in the late 1950s, when many ofthe countries were current or recentcolonies of European countries. The ACP,which now includes 79 countries, acts as a

group within a legal framework—the 20-year Cotonou Agreement, signed in 2000—involving development, cooperation, anddialogue. (While an ACP country, Cuba isnot a signatory to the Cotonou Convention)

EU funding for 2003-2008 of nearly $16billion supports economic reform efforts ofACP governments, expansion of the privatesector, and improved social services,including better water supplies andmodern energy services.

The relationship between the EU and theACP countries is evolving from a system oftrade preferences granted by the EU toEconomic Partnership Agreements basedon the progressive and reciprocal removalof trade barriers. EPAs foster greater inter-regional trade ties between ACP countriesand will gradually lead to the developmentof free trade areas.

With the creation of the African Unionin 2002, the European Union took a

broader approach to its relations withAfrica. The European Commission quicklyinitiated strategic support of the AfricanUnion Commission by funding its institu-tional development and core activities,including initiatives to promote peace andsecurity, good governance, regional inte-gration, and increased trade.

Canada In 1976, Canada became the first industri-alized country to sign a commercial andeconomic agreement with the EU. Theagreement established mechanisms forcooperation in areas such as trade,industry, and science.

Links between Europe and Canada havetraditionally been close. A PartnershipAgenda adopted by the EU and Canada in2004 identifies ways to achieve progresson issues of mutual interest, includingforeign and security policy; justice and

home affairs (including air travelsecurity); promotion of global economicgrowth; and tackling global challengessuch as climate change and poverty indeveloping countries.

In foreign and security policy, the EUand Canada draw on a shared commitmentto effective multilateral institutions andgood global governance to projectcommon values on the world stage, forexample, by working together to fullyestablish the jurisdiction of theInternational Criminal Court.

At their 2005 summit, EU and Canadianleaders completed the first round of negoti-ations on a framework for a bilateral Tradeand Investment Enhancement Agreement.The next summit is scheduled for 2007.

Latin AmericaBuilding on long-standing bilateralrelations between European countries andLatin America, the European Union hasestablished and built up links with LatinAmerica since the 1960s. The relationshipbetween the two continents has substan-tially evolved over the past three decades.Today’s partnership reflects the increasingimportance both parties attach to furtherstrengthening the relationship in thefuture. As the region’s primary foreigninvestor and second most important tradepartner, the EU is an important economicand political partner for Latin America.The EU is the leading development donor



(right) Leaders at the 2006 EU-Latin America and Caribbean Summit.

(below left) Sanitation and hygiene project in Colombia.

(below right) European Commission President JoséManuel Barroso at UN Summit, September 2005.


in the region, providing 55 percent of allaid. Trade between Europe and LatinAmerica doubled from 1990 to 2005.

A full range of cooperation agreementshave been concluded at all levels (bilateral,bi-regional and sub-regional) in the threeareas of economic cooperation, institution-alized political dialogue, and the strength-ening of trade relations to promotedemocracy, peace, and economic develop-ment in the region. All cooperation andassociation agreements signed by the EUand its Latin American partners include a“democracy clause”, pledging cooperationand mutual respect for democratic princi-ples and human rights.

Mercosur (Mercado del Sur), the CACM(Central America Common Market) andthe Andean Community represent thethree main regional integration processesin Latin America.

The specific dialogue between the EUand these regional partners reflects theimportance attached by the EU to regionalintegration as a vehicle to foster betterunderstanding between neighboringcountries and to strengthening multilater-alism in the long term.

The EU is negotiating an associationagreement with the Mercosur countries(Argentina, Brazil, Paraguay, Uruguay, andVenezuela) that will include the creation ofa free trade area. The EU-MercosurAgreement will be the first ever betweentwo regional trade blocs, and will form themost far-reaching free trade agreement in

the world. A separate free trade agreementalready exists with Chile as part of abroader association agreement.

The Union also provides preferred accessto EU markets for the Andean Communityand Central America to help fight illegaldrug production.

In July 2005, Chile became the secondSouth American country, after Argentina,to participate with the EU in OperationALTHEA, the peacekeeping mission inBosnia and Herzegovina.

The EU also actively supports the peaceprocess in Colombia.

MexicoThe EU and Mexico share an institutional-ized political dialogue in which theydiscuss multilateral and bilateral issues,such as poverty, terrorism, human rights,democracy, migration, and regional devel-opment. The EU identified cooperationactivities with Mexico for 2002-2006 in aCountry Strategy Paper. Priority actionsectors include: social development and thereduction of inequalities among varioussegments of the Mexican population;economic growth through facilitating theimplementation of a free trade area; scien-tific and technical cooperation; and consol-idation of the rule of law and institutionalsupport. Two additional areas of interestare reform of the judicial system and EUfinancial support for human rights reform.An EU-Mexico Economic Partnership,Political Cooperation, and Coordination

Agreement has been in force since 2000,and includes a free-trade agreement forgoods, effective July 2000, and for services,in force from March 2001.




To achieve economic integration, thefounding treaties provided for commonpolicies in trade, agriculture, competition,and transport. Over the years, MemberStates agreed to add new sectors such asresearch and technology, energy, the envi-ronment, education, and training. The EU is also addressing policy in sectorssuch as telecommunications and theinformation society.

AgricultureCreated in 1962 to guarantee food supplyand farm incomes in Europe, the CommonAgricultural Policy (CAP) comprises a setof rules and mechanisms which regulatethe production, trade, and processing ofagricultural products in the EuropeanUnion (EU), with attention being focusedincreasingly on rural development.

The 1970s and 1980s saw heavy pricesupport and consequently, overproduction.After a series of reforms, direct paymentsto farmers are now completely separatedfrom farm production and subject to com-pliance with strict environmental, animalwelfare, and land management standards.

While most other EU policies arefinanced predominantly from MemberState treasuries, the CAP is the only policyfunded entirely from the EU budget.Consequently, it accounts for a large sliceof that budget––currently just under half.Nevertheless, the EU still spends only 0.43percent of its GDP on agriculture, a figure

which will decline to about 0.33 percentby 2013.

Today’s CAP reflects a political choice byEuropean society. EU agriculture should bea versatile, sustainable, and competitiveeconomic sector. In addition to fulfilling itsrole in food and fiber production, it con-tributes to nature conservation and thevitality of rural areas.

These “non-trade concerns” are funda-mental to sustainable agriculture, maintain-ing the landscape and the environment, andresponding to consumer concerns.

The new CAP will help the EU meet itspledge to phase out all export subsidies,and thus to boost world trade and helpdeveloping countries emerge from poverty.The EU is prepared to bind these reformsinto a global trade accord, providing thatthe United States and others commit them-selves to similar reforms. In the currentworld trade negotiations, the EU advocates:lowering trade distorting farm subsidies;WTO discipline applied to all forms ofexport support; sustainable development inagriculture (consideration of non-tradeconcerns); working to increase marketaccess opportunities for developingcountries, particularly the poorest.

The EU has an impressive record as animporter of agricultural products fromdeveloping and least developed countries:• the EU is the world’s leading importer of

agricultural goods, including goods fromdeveloping countries;

• the EU absorbs around 85 percent ofAfrica’s agricultural exports and 45percent of those from Latin America;

• the EU is the largest importer of agricul-tural products from the poorestcountries (least developed countries).Animal Health and Welfare. The EU is

dedicated to the protection and improvedhealth status and condition of animals inthe EU, especially the food-producinganimals, while permitting trade andimports of animals and animal products.The EU pursues these policies actively, par-ticularly in light of recent experiences withanimal health—such as foot and mouthdisease (which poses serious problems foranimal health and welfare in addition toeconomic consequences)—along with therisks for humans associated with someanimal diseases (BSE, avian influenza). EUpreventive health measures in this areafocus on: trade and the import of liveanimals and animal products; themovement of pets, including a petpassport; measures to control, and ifpossible, eradicate animal diseases; andseparate identification measures toguarantee the “traceability” of animals.

The EU’s responsibility in this areaincludes legislating improvements for thewelfare of animals and the prevention of

cruelty against animals and their mistreat-ment. EU activities in this area are basedon the recognition that animals aresentient beings, and this principle is thefoundation for EU legislation developedover the past 30 years related to animalwelfare in farming, transport, andslaughter. The same principle applies tointernational activities to build awarenessand consensus on the importance ofanimal welfare internationally. TheCommunity Action Plan on the Protectionand Welfare of Animals, 2006-2010,embodies this European commitment.

Food Safety. EU policy ensures thatconsumers can confidently enjoy access toan affordable and safe variety of food.Experience shows that the entire foodchain must be addressed if safety is to beguaranteed. EU laws cover how farmersproduce food, how food is processed, howit is sold, how it can be traced through thesupply chain, and the type of informationprovided on the label. The EU alsoregulates the safety of food imported intothe EU, including requirements onextensive traceability.

The EU and the U.S. both have highfood safety standards, although U.S.consumers may recognize that differentapproaches in some areas—e.g.,mandatory labeling of geneticallymodified organisms (GMOs) or banning

Chapter Six

Making Decisions Together:An A to Z of EU Policies

How is the EU Run?



the use of hormones as growthpromoters—can sometimes give rise to disputes.

Plant Health. EU plant health legislationaims to protect the safety of food derivedfrom plants and to secure the health andquality status of crops in all MemberStates. The Union’s plant health policy alsoguards against the introduction and spreadof organisms harmful to plants or plantproducts within the EU and ensuresquality conditions for the sale of seeds andpropagating material within the Union.The EU regulates intra-EU trade in plantsand plant products, as well as imports fromthe rest of the world. The EU supervisesthe authorization and use of pesticides,and sets standards to monitor and controlresidues in food and feed.

AviationThe EU has a single integrated free aviationmarket, which means all European carrierscompete on equal terms across the EU.Airlines set capacity and fares according tomarket demand, which has generatedincreased competition and significanteconomic benefits in terms of expandedservice, lower fares, and more jobs in theaviation sector. The June 2006 EuropeanCommon Aviation Area agreementextended the European Aviation Market tothe Western Balkan countries, whichtogether with the 27 EU Member States,Norway, and Iceland constitute a commonaviation area of more than 35 states and

over half a billion people.Opening markets and promoting invest-

ment are only two successes of the EUsingle aviation market. The establishmentof the European Aviation Safety Agency in2002 reflects the EU’s desire to ensureuniform safety standards and oversight.The adoption of “single sky” legislation in2004 launched an ambitious program tocreate an EU wide traffic managementsystem where airspace is configured on thebasis of operational efficiency instead ofnational frontiers, thereby reducing delaysand congestion. The EU has also adoptedimportant legislation in the fields ofaviation security, environmental rules, andpassenger protection.

The European Court of Justice ruled inNovember 2002 that a number of “open-skies” bilateral air services agreementsbetween individual Member States and theUnited States are illegal. By reserving trafficrights for national carriers these agree-ments prevented free competition in theprovision of international air transportbetween the EU and the U.S. In June 2003,the Member States granted the EuropeanCommission a mandate to negotiate acomprehensive aviation agreement withthe United States that would replace thesebilateral accords. While a tentativeagreement was reached in November 2005,talks are ongoing to rebalance theagreement to the satisfaction of both sides.

The EU and the U.S. are each other’sleading aviation partners. Together their

aviation markets account for about 60percent of global civil aviation output. Arecent study carried out for the EuropeanCommission estimated that over the courseof five years, an EU-U.S. Open AviationArea would generate 26 million additionalpassengers; up to $18 billion in consumerbenefits; and an additional 80,000 new jobsin the EU and U.S. combined.

Competition (Antitrust) EU competition policy is essential for thecompletion of the Internal Market, giventhat the single market’s purpose is to allowfirms to compete on a level playing field inall the Member States. The role of competi-tion policy is to encourage economic effi-ciency by creating a climate favorable toinnovation and technical progress. In amarket economy, competition promoteseconomic success, safeguarding theinterests of consumers and ensuring thatbusinesses, goods, and services are compet-itive on the world market.

The European Union’s competition

policy ensures that healthy competition isnot hindered by anticompetitive practicesby companies or national authorities(restrictive agreements and concertedpractices), attempting to prevent one ormore businesses from improperly exploit-ing their economic power over weakercompanies (abuse of a dominant position).

Unlike U.S. antitrust law, EC law alsoprohibits state aid that distorts competitionin the internal market.

The Commission has jurisdiction overlarge-scale mergers and acquisitionsaffecting more than one Member State andexceeding certain thresholds. TheCommission can fine antitrust violators.Like the U.S. government, it is entitled toreview mergers between non-EUcompanies with certain revenue thresholdsthat conduct significant business in the EU.

The European Commission cooperateswith the U.S. authorities (Department ofJustice and the Federal Trade Commission)primarily on the basis of the 1991Cooperation Agreement and the 1998Positive Comity Agreement. Principalelements of cooperation are mutual infor-mation about enforcement activities (noti-fications), coordination of enforcementactivities, and exchange of non-confiden-tial information. The intensity of coopera-tion is increased if the parties to a casehave granted a waiver allowing theexchange of otherwise protected informa-tion. The Positive Comity Agreementallows one party adversely affected by anti-


Chapter SixMaking Decisions Together

“The transatlantic aviation market istoday already highly competitive. Buteconomic barriers to free competitionstill remain….We want to remove thesebarriers. We have a free market inEurope and we want to extend it tocreate a transatlantic area.”

—European Commission Vice-PresidentJacques Barrot, Commissioner forTransport


competitive behavior in the other’sterritory to request that the other partytake action.

The EU and the U.S. are exploring asecond generation agreement, which wouldallow for the exchange of confidentialinformation and facilitate cooperation inthe fight against cartels.

EU and U.S. cooperation over the yearshas led to a process of “soft convergence,”with the two partners seeing eye-to-eye inmost cases. The fact that that the EU andthe U.S. operate on the basis of differentlaws, however, makes it inevitable that,from time to time, different approacheswill be adopted. The EU’s July 3, 2001,decision blocking the GE-Honeywellmerger is the only instance to dateinvolving a U.S. company where the EUblocked a U.S.-approved merger.Complaints considered for the mergerexamination, however, came from bothsides of the Atlantic.

Consumer PolicyConsumer interests lie at the center ofcitizens’ daily lives. The new 2007-2013consumer policy strategy and program aimto bring these issues to center stage and putforward concrete actions to meet citizens’concerns, bringing a stronger focus tocitizens’ issues in policy making and helpingto bring Europe closer to its citizens.

Consumer policy is about making surethat all consumer products and services

sold in the EU are safe, that consumers’rights are protected, that consumers havethe information required to make aninformed choice, and that they are notmisled. This applies whether consumers areshopping in their local supermarket,traveling throughout the EU, or using awebsite based in another EU MemberState. EU policy seeks to reassureconsumers that, as trade liberalizationcontinues, their interests are not taking aback seat to those of business.

Recent consumer policy strategy soughtto ensure a high common level ofconsumer protection by harmonizing thesafety of goods and services, as well as theeconomic and legal interests that willenable consumers to shop with confidenceanywhere in the EU and by whatevermeans. EU consumer policy also addressesthe effective enforcement of consumer pro-tection rules throughout the EU and theproper involvement of consumer organiza-tions in EU policies (on a footing similar toother stakeholders).

The new 2007–2013 consumer strategybuilds on what has already been under-taken to make consumers more confidentin the internal market, while taking intoaccount new challenges, such as increas-ing e-commerce and the liberalization ofsome services. The two main objectives(the same as those in the Consumerfinancial program 2007–2013) are toensure a high level of consumer protec-

tion, notably through improved evidence,better consultation, and better represen-tation of consumers’ interest, and toensure the effective application ofconsumer protection rules notablythrough enforcement cooperation, infor-mation, education, and redress.

Education and TrainingThe EU has several programs to promotecooperation in education betweenMember States. Many neighboringcountries also participate in theseprograms which cover all areas ofeducation from school through universityand lifelong learning. Programs such asSocrates and Leonardo da Vinci offergrants to study, teach, or undertaketraining in another country. They alsooffer educational establishments theopportunity to cooperate on joint projectsand establish networks. Under theErasmus program, university students maypursue part of their studies in anothercountry—well over 1.2 million have doneso already. The Erasmus Mundus program,launched in 2004, promotes the EU as aglobal center of excellence, by supportinginter-university EU Masters Courses andfunding scholarships for non-EU studentsand scholars. Over 120 U.S. students andscholars have benefited already.

Under the so-called Bologna Process,which now extends far beyond EU borders,45 countries are working toward convergenceof their higher education systems, throughthe introduction of a system based on threecycles (bachelors, masters, doctoral); aEuropean Credit Transfer System; diploma

supplements to increase transparency andfacilitate recognition of qualifications; andcooperation in quality assurance.

Transatlantic cooperation in education isan important component in stimulatingeconomic growth and prosperity as well asnurturing the EU-U.S. relationship. TheEU-U.S. Cooperation Program in HigherEducation and Vocational Education andTraining, renewed in 2006, jointly fundscooperative activities between educationalestablishments in the EU and the U.S.Since the program started, over 100projects have been funded, involving morethan 700 institutions. Over 4000 studentshave benefited from the resultingexchanges. Under the new AtlantisProgram, institutions can apply for four-year grants to implement exchanges ofstudents and teachers. In future years—budget permitting—it may be extended tograduate programs. It also supportsprojects on policy issues related to transat-lantic education.

The Agreement also includes theSchuman-Fulbright Grant Scheme, whichprovides support to professionals forstudies or training in areas of specificrelevance to the EU-U.S. relationship atinstitutions in the U.S. or EU.

Economic and Monetary Union (EMU)and the EuroEMU. The euro is the most visible elementof a much larger project—Economic andMonetary Union—a major EU achieve-ment that includes the establishment of acommon stability-oriented macroeconom-ic policy framework and reinforced coop-






eration in a wide range of policy fields.While only 13 EU Member States currentlyuse the euro, all 27 participate in Economicand Monetary Union.

Unique among monetary unions, EMUcombines a single monetary policy for the

euro area countries, defined and imple-mented by a supranational institution, theEuropean Central Bank, with nationalresponsibility in most other economicpolicies. These latter policies, however, arecoordinated.

The Lisbon Strategy for Growth andJobs, adopted in 2000, aims to providemore and better jobs in a more dynamicand innovative Europe that is an attractiveplace to invest and work. Means to theseends will include increased investment inknowledge and innovation, policies tounlock business potential, particularly forsmall and medium sized businesses,increasing employment opportunities,and moving toward an efficient and inte-grated EU energy policy.

The Stability and Growth Pact aims atcombining budgetary discipline with flexi-bility, to assist Member States to pursuenational fiscal policy objectives whileensuring that public finances remain on asound and sustainable footing.

EMU is a logical complement to Europe’sinternal market and has succeeded in deliv-ering conditions of macroeconomicstability—in terms of low inflation,budgetary discipline, and elimination ofexchange rate tensions—to the participat-ing Member States, while fostering furthereconomic integration in product marketsand financial markets.

Employment and Social PolicyUnder the European Employment Strategy(EES), the European Council (the EU’sHeads of State and Government) agrees onannual, common priorities for employmentpolicies, along with individual objectives forMember States. The objectives include: jobcreation, job quality, balance between workand personal life, opportunities for olderworkers, and eliminating discriminationbased on race, gender, and disabilities. Each

EU government produces an action planfor putting those guidelines into practice.Progress is measured against about 100indicators, ranging from basic economicfigures to the availability of childcare.

The European Social Fund (ESF) is themain financial tool through which the EUtranslates its strategic employment policyaims into action. Established by the Treatyof Rome, the ESF has, for more than half acentury, and in partnership with theMember States, invested in programs todevelop people’s skills and enhance theirpositions in the job market.

The European Commission adopted anIntegrated Guidelines Package containingeconomic and employment policies for2005-2008, designed to spur growth andjobs. Proposals include reducing regulatoryroadblocks and increasing research anddevelopment investment. The EU must workhard if it is to achieve the Lisbon Strategytarget of a 70 percent overall employmentrate by 2010, currently at 64.3 percent.

Combined with its strategy to create jobs,the EU seeks to ensure a decent workingenvironment throughout the Member

“Renewable energy is one of the mostimportant ways to bring Europe not onlyenvironmental benefits, but also otherimportant advantages such as (i) improvedsecurity of supply due to reduced need forimported hydrocarbons, (ii) increasedemployment, and (iii) technological devel-opment….I am fully committed to ensurethat the Union continues to work towardthe ambitious target of a 12 percent shareof renewable energy by 2010.”

—EU Energy Commissioner AndrisPiebalgs, March 9, 2005, Brussels.

The Euro

The EU officially launched the euro on January 1, 1999, followed three years later—onJanuary 1, 2002—with the circulation of banknotes and coins throughout the euro area. Thismilestone achievement represents the culmination of the EU’s long-standing ambition tocement closer economic integration with a single currency.

The euro is the single currency of 13 of the EU Member States, and is issued and managedby the European Central Bank. The 13 Member State “euro area” represents a population ofroughly 313 million and accounts for 20 percent of world output (compared to 30 percent forthe U.S.). Beyond its economic impact, the euro has substantial political significance andadds to the EU’s capabilities as an international actor.

The 13 euro countries are Austria, Belgium, Germany, Greece, Finland, France, Ireland, Italy,Luxembourg, the Netherlands, Portugal, Slovenia, and Spain. Denmark and the UK negotiat-ed an “opt-out” Protocol to the EU Treaty, granting them the option of joining the euro area ornot. If they decide to do so, both countries must fulfill the convergence criteria—achievementof a high degree of price stability, of sound and sustainable public finance, and of exchangerate stability—set out in the Maastricht Treaty.

The introduction of the euro has gone a long way toward eliminating the inefficiencies impliedby business and consumers being required to operate in many different national currencieswithin the same market. These efficiency gains have come via lower transaction costs andintensified competitive pressures through enhanced price transparency. The euro is the mostimportant factor behind the recent acceleration in EU financial integration, as reflected inmore homogenous financial markets, consolidation among intermediaries and market infra-structures, and the emergence of new and innovative products and techniques.

Meanwhile, the euro has emerged as the second currency of the international financialsystem, reflecting financial market confidence in the currency’s underlying policy frameworkand more predictable macroeconomic regime. The euro’s stability and liquidity make it anattractive reserve currency for foreign governments seeking to diversify their internationalcurrency holdings and lower risk, ultimately contributing to global economic stability.

Member States that do not use the euro can choose to link their currencies to the euro underthe Exchange Rate Mechanism (ERM II), with the aim of minimizing fluctuations in exchangerates between the euro and the currencies of participating non-euro Member States andfostering economic convergence.

Denmark, which did not adopt the euro when it was introduced, and six of the Member Statesthat joined the EU in 2004 (Cyprus, Estonia, Latvia, Lithuania, Malta, and Slovakia) are par-ticipating in ERM II. Slovenia adopted the euro as of January 1, 2007, and the other 11 of thenewest Member States are committed to adopting the euro, as soon as they fulfill therequired conditions, although there is no fixed timetable.


States, protect workers through rules onworking conditions and workplace healthand safety, and promote healthy labor-management relations. The EuropeanCommission’s Social Agenda, approved inearly 2005, addresses the need for pensionand social security entitlements that aretransportable across borders, employmentfor older workers, and support for womenentering or re-entering the work force.

EnergyIn January 2007, the EuropeanCommission proposed a comprehensivepackage of measures to establish a new EUenergy policy, intended to address anumber of key concerns:• combating climate change;• reducing energy consumption;• securing the supply of energy;• achieving sustainable power generation

from fossil fuels;• fostering a more open and competitive

internal energy market;• stimulating technological development

and job creation.Specific targets are set for reducing

greenhouse gas emissions, increasingrenewable energy use, and improvingenergy efficiency. The plan also calls for aStrategic Energy Technology Plan topromote innovation, a more integrated EUinternal energy market that addressesenergy sector competition problems withinMember States, and an EU external energypolicy that enables the EU to “speak with

one voice” internationally on energy issues.The proposals also include a review ofMember States’ policies on nuclear energy.

The proposed new EU energy policy isset against the backdrop of an unsustain-able energy future. Currently, the EUimports 50 percent of its energy, a statisticthat could increase to 70 percent by 2030 ifno policy changes are made. World energydemand is expected to increase by 50percent over the same period, leading tohigher prices and more competition forfinite energy resources. To reduce depend-ence on imports and cut pollution, the EUmust reduce the use of fossil fuels inindustry, transport, and the home. At thesame time, renewable energy sources mustbe used to generate electricity, heat andcool buildings, and fuel transport. The EUwill also need to use traditional energysources in a more sustainable way.

European Commission President JoséManuel Barroso said in early 2007: “Thechallenges of climate change, increasingimport dependence and higher energyprices are faced by all EU members. Acommon European response is necessaryto deliver sustainable, secure, and competi-tive energy. The proposals put forward by

the Commission…demonstrate our com-mitment to leadership and a long-termvision for a new Energy Policy for Europethat responds to climate change. We mustact now, to shape tomorrow’s world.”

Environment The EU has developed a substantial bodyof environmental law to protect againstwater, air, and noise pollution and tocontrol risks related to chemicals, biotech-

“Climate change touches on all aspectsof our society. It is a threat not only tothe environment, but also to oureconomies and, in the end, our security.”

—Environment Commissioner StavrosDimas, April 18, 2005, Washington, D.C.

The Schengen Agreement

The Schengen Agreement initially entered into force in Belgium, Netherlands, Germany, France,and Luxembourg and abolishes controls at the internal borders of the participating countries,while immigration and other frontier control measures are carried out according to a single setof rules. The original five participants have since been joined by Denmark, Greece, Spain, Italy,Austria, Portugal, Finland, Sweden, and European Economic Area (EEA) members Iceland andNorway. Switzerland will join the Schengen Area soon. The United Kingdom and Ireland choseto apply only parts of these arrangements, while the 12 EU Member States that joined since2004 must still put in place certain flanking measures (e.g. access to common police and bordercontrol databases, specific police and judicial cooperation legislation and mechanisms, as wellas high standard controls of the common external border) before they become full-fledgedSchengen members.





nology, and nuclear energy within theUnion. The overall direction of the EUenvironment policy is laid out in recurringmulti-year action programs, the mostrecent of which—“Environment 2010: OurFuture, Our Choice”—concentrates onfour priority areas: climate change, natureand biodiversity, environment and health,and natural resources and waste.

In the area of health, the EU has recentlyadopted a new chemicals policy and legis-lation known as REACH (Registration,Evaluation, and Authorization of ChemicalSubstances), that enters into force on June1, 2007. REACH shifts the burden of prooffrom government to industry to providesufficient and adequate information con-cerning the properties and intended uses ofchemicals in commerce to allow workers,downstream users, and consumers to usethose chemicals safely.

The EU’s environmental policy is under-pinned by the “precautionary principle”using available scientific information. It isalso based on the “polluter pays” rule andthe management and control of pollutionat the source. Costs of preventing andeliminating pollution should, in principle,be borne by the polluter—who may berequired to set up systems to take back,recycle, or dispose of used products such asvehicles or electronics.

The EU has enshrined the notion of “sus-tainable development” in its Treaty andadheres to this practice by integrating envi-ronmental responsibility across the policy

and activity spectrum. The ultimate goal ofsustainable development is to achieve aform of development that meets the needsof the present without compromising theability of future generations to meet theirown needs, ensuring that today’s consump-tion and/or pollution of finite resources foreconomic growth does not jeopardize thegrowth possibilities of future generations.

The EU spearheads global efforts toprotect the environment. The EU, forinstance, is one of the initiators of themove by the United Nations EnvironmentProgram (UNEP) to create a strategicapproach to the international manage-ment of chemicals. The EU is an activeparty to the Kyoto Protocol on ClimateChange, which entered into force inFebruary 2005, and was ratified by morethan 140 nations. On January 1, 2005, theEU launched a CO2 emissions-tradingprogram, which covers half of the EUeconomic sectors and is one of theprincipal instruments for achieving theEU’s target of 8 percent reduction ofgreenhouse gases from their 1990 level by2010. Member States established nationalallocation plans, agreed at the EU level, oncarbon dioxide emissions from industrialplants. Companies that exceed their capwill have to buy additional allowancesfrom companies that succeed in reducingemissions. The EU is currently consider-ing further reductions of greenhouse gasemissions of between 20 and 30 percentby 2020.

The EU is party to a number of interna-tional agreements and partnerships,including the UN Framework Conventionon Climate Change and the UN MontrealProtocol on Ozone Depletion.

Foreign Aid and Development—SeeChapter 5

Funding Instruments—See Chapter 5

Freedom, Security, and Justice One of the EU’s objectives is to consolidateitself as an area of “Freedom, Security, andJustice.”

The Union assumes the common respon-sibility for a full range of policy areas tofight terrorism; tackle organized crime;manage migration; establish a commonasylum area; develop supportive measureson integration to maximize the positiveimpact of migrants in the EU; and furtherdevelop an integrated management of theexternal borders and a common visa policyto guarantee the free movement of peoplewithin the EU.

The EU takes legislative and otheractions to put into practice the principle ofmutual recognition of judicial decisionsand to ensure that court rulings andsentences passed in a specific nationaljurisdiction are fully accepted and enforcedwith the same vigor in other legal systemswithin the EU. This principle of mutualrecognition applies to both civil andcriminal matters.

The European arrest warrant, which is oneexample of EU measures taken in this field,replaces the traditional extradition proce-dures among Member States, and allowswanted persons to be handed over directlyfrom one judicial authority to another.

Internal security and cooperation onserious and organized crime are importantelements of the area of Freedom, Security,and Justice. Following intense legislativeactivity since 1999, renewed in 2004 withThe Hague Program, the EU has beenestablishing agencies and bodies that areessential to guarantee a working area ofFreedom, Security, and Justice.

EUROPOL, the European Police Office in The Hague, Netherlands(www.europol.europa.eu) assists inimproving the effectiveness and coopera-tion of the competent authorities in the27 European Union Member States inpreventing and combating all forms ofserious crime and terrorism. EUROPOLcoordinates the collection, analysis, anddissemination of law enforcement infor-mation and deals with an expandingrange of crimes, including counterterror-ism issues. Since 2006, EUROPOL alsofunctions as the Central Office forCombating Euro Counterfeiting bothwithin the EU and externally. EUROPOLcooperates—mainly through its liaisonoffice in Washington and four U.S. liaisonofficers based at the EUROPOL headquar-ters in The Hague—with the U.S. lawenforcement authorities.



Established in 2002, EUROJUSTconsists of a “college” of experiencedjudges and prosecutors. EUROJUST, alsobased in The Hague, was set up toenhance coordination and cooperationbetween national investigating and prose-cuting authorities of the EU27.

Other bodies and decentralized agencieswith a more specific focus are also essentialtools to consolidate the EU as an area ofFreedom, Security, and Justice withoutinternal borders.

FRONTEX, the European Agency for theManagement of Operational Cooperation atthe External Borders of the Member Statesof the EU, has its headquarters in Warsaw,Poland. It applies existing and future EUmeasures relating to the management of theEU’s common external border.

The European Police College or CEPOLwas established in 2000 as a network aimedat bringing together the national traininginstitutes for senior police officers in theMember States of the EU.

The EU Agency for Fundamental Rightsprovides the EU and its Member States withobjective, reliable, and comparable informa-tion and data on racism, xenophobia,Islamophobia, and anti-Semitism to helpthe EU and its Member States formulateactions against racism and xenophobia.

The European Monitoring Center forDrugs and Drug Addiction is the centralreference point for drug information in theEuropean Union.

HealthWithin the EU, responsibility for healthpolicy is divided between the European

Commission and the Member States withthe latter, for example, responsible forhealth care delivery to citizens. The mainthrust of EU public health policy is to helpEU countries pool their expertise onhealth, to identify and share best practices,and to help coordinate EU-wide prepared-ness and responses to health threats such asinfectious disease outbreaks and obesity.Fostering cooperation between EUcountries’ healthcare systems is alsobecoming an increasingly important areaof activity. A new health Strategy for 2007-2013 is currently in preparation and isexpected to be adopted in mid-2007.

Special topics for work in this area includethe EU Health Forum; communicable, rareand other diseases; HIV/AIDS; injury pre-vention; tobacco; nutrition and obesity;bioterrorism; and health and environment.

The European Center for DiseasePrevention and Control (ECDC)(http://www.ecdc.europa.eu/), set up in2004, now plays a key role in fostering coop-eration and coordination in the EU, and isdeveloping a close working relationshipwith the U.S. Centers for Disease Control.

Human RightsHuman rights, democracy, and the rule oflaw are core principles of the EuropeanUnion. Embedded in the Union’s foundingtreaty, they have been reinforced by theadoption of the Charter of FundamentalRights. Respect for human rights is a pre-requisite for countries seeking to join theUnion and a precondition for countriesconcluding trade and other agreementswith the EU.

The European Union views human rightsas universal and indivisible, and activelypromotes and defends such rights withinits borders and through its externalrelations. At the same time, the EU doesnot seek to usurp the broad powers of itsMember States in this sphere.

The focus of the Union’s human rightspolicy is on civil, political, economic,social, and cultural rights. It also seeks topromote the rights of women and children,minorities, and displaced persons.

The Union is particularly concernedabout human rights vis-à-vis asylum andmigration and is fighting racism, xeno-phobia, and other discrimination againstminorities.

The EU Fundamental Rights Agencyserves as an independent center ofexpertise on fundamental rights issuesthrough data collection, analysis, and net-working. The Agency advises the EU insti-tutions and the Member States on howbest to prepare or implement fundamentalrights-related EU legislation.

Externally, respect for human rights andfundamental freedoms are general objec-tives of the Common Foreign and SecurityPolicy (CFSP). Since 1992, all trade andcooperation agreements with non-EUcountries contain clauses stipulating thathuman rights constitute an essentialelement of the relations between theparties (currently more than 120).

Failure to respect human rights can leadto the suspension of trade concessions andaid the reduction of aid programs.

The EU’s program of emergency human-itarian assistance around the world is not

normally subject to restrictions because ofhuman rights breaches. These aid deliver-ies, in cash or in kind, or technical assis-tance are all decided with the sole aim ofrelieving human suffering whether causedby natural disasters or misrule by oppres-sive regimes.

To add weight to its support for humanrights around the world, the EU funds theEuropean Initiative for Democracy andHuman Rights (EIDHR). Established in1994, EIDHR has an annual budget of€130 million and focuses on four areas:• strengthening democracy, good gover-

nance, and the rule of law (cooperatingwith civil society to promote politicalpluralism, a free media, and sound justicesystem);

• abolishing the death penalty in countriesthat still retain it;

• combating torture through preventivemeasures (e.g. police training andeducation) and repressive measures (e.g.creating international tribunals andcriminal courts);

• fighting racism and discrimination byensuring respect for political and civilrights.The EU and the U.S. hold biannual

Human Rights Consultations to discuss arange of global and domestic issues as wellas to develop strategies to promote humanrights through multilateral organizations.

The EU publicly condemns human rightsviolations wherever they occur, appealingto the countries concerned to end suchviolations, and pressuring the authoritiesin question.

The European Union is actively






promoting a global moratorium on the useof the death penalty and therefore protestsagainst the practice in individual casesthroughout the world. The EU has insistedthat bilateral extradition treaties with non-EU countries automatically preclude the useof the death penalty in all cases of extraditedprisoners from EU Member States.

Regional DevelopmentThe EU strives to reduce the social andeconomic disparities among its regions, andhas pursued this objective from its earlyyears. And the EU includes some majoreconomic disparities, which are twice asgreat in the EU of 27 members, with its 268regions, as they were in the Europe of 15.Regional policy represents the concreteimplementation of the European ideal ofsolidarity among Member States. Morethan one-third of the EU budget isallocated toward reducing gaps in develop-ment among regions as well as disparities inthe well-being of EU citizens.

Four Structural Funds benefit regions inall the Member States. Three funds were setup in the 1970s—the European SocialFund, the European Regional DevelopmentFund, and the European AgriculturalGuidance Fund—plus the newer FinancialInstrument for Fisheries Guidance. Thesefunds co-finance with the Member Statesprojects in areas affected by economicdistress or industrial decline. The EU setsjob creation, poverty reduction, and socialinclusion as primary objectives.

A Cohesion Fund was set up by theMaastricht Treaty to reduce economic dis-parities between the EU and Spain, Greece,

Portugal, and Ireland. The Cohesion Fundfinances up to 85 percent of eligible expen-diture for major projects involving theenvironment and transport infrastructure,strengthening cohesion and solidaritywithin the EU. Eligible countries are theMember States whose per capita grossnational product (GNP) is below 90percent of the EU-average (since May 1,2004, Greece, Portugal, Spain, Cyprus,Czech Republic, Estonia, Hungary, Latvia,

Lithuania, Malta, Poland, Slovakia,Slovenia, Bulgaria, and Romania).

Ireland is one of the EU regional policy’smost prominent success stories. Since 2004,Ireland is no longer eligible for theCohesion Fund, having exceeded eligibilitylevels with a per capita GNP of 101 percentof the EU average.

Future priorities of the cohesion policy

focus on convergence, competitiveness, andcooperation:• Convergence: supporting employment

growth and job creation in the MemberStates and least developed regions;

• Regional competitiveness and employ-ment: to anticipate and encourage thechange;

• European territorial cooperation: toensure harmonious and balanced devel-opment throughout the entire Union.

Research and Development Europe has a long tradition of excellencein research and innovation, and eachMember State has its own research andinnovation policies and programs. Inrecent years, the “European research area”(ERA) has been taking shape. Thepurpose of ERA is to build a research andinnovation equivalent of the “common

market” for goods and services by bettercoordination of research programs andthe convergence of research and innova-tion policies at national and EU levels,thereby securing the economic and com-petitive future of the Member States.More recently, as part of the “LisbonStrategy,” EU leaders have recognized theneed to accelerate investment in R & D to3 percent of GDP.

Vital to the development of ERA are theEU’s Framework Programs for research andtechnology development and demonstra-tion that have been in place since the early1980s. These programs stimulate coopera-tion among partners in different countriesby funding transnational research andpromoting coordination among scientificand technological facilities. Although thefunds provided by the EU account for onlyaround 5 percent of the overall publicresearch funds in Europe (most research isfunded nationally), this funding is a majorinstrument for encouraging research collab-oration in Europe and beyond. Central tothe success of the Framework Programs istheir relevance to European industry.

At the end of 2006, the EuropeanCommission published the first calls forproposals of the 7th European FrameworkProgram for Research and TechnologicalDevelopment, the biggest ever Europeanresearch program (2007-2013—€54.6billion). FP7 is divided into four mainprograms:• Cooperation supports cooperative

research in specified thematic areas.• Ideas funds investigator-driven research

through a newly created European


Research Council (ERC).• People supports training and researchers’

career development.• Capacities supports the coordination

and development of research infrastruc-ture, regional research clusters, interna-tional cooperation, and closer tiesbetween science and society.The EU is a major player in a number of

international scientific and technologicalinitiatives. For example, through ITER(International ThermonuclearExperimental Reactor), a flagship project infusion research, the EU is partnering withsix countries—China, South Korea, theUnited States, Japan, India, and Russia—to build a thermonuclear experimentalreactor that relies on nuclear fusion.

In 2006, the EU published a strategicroadmap for research infrastructures,including 35 large-scale research infrastruc-ture projects identified by the EuropeanStrategic Forum for Research Infrastructures(ESFRI), assisted by nearly 1000 high-levelexperts, including U.S. scientists.

The EU also has a strong internationalscience and technology policy, to supportEuropean competitiveness throughstrategic partnerships with other countriesand to address specific problems of devel-oping countries or problems of a globalcharacter.

The Science and Technology Co-operation Agreement between theEuropean Union and the United States,originally signed in 1998 and renewed in

2004, brings a pan-European dimension totransatlantic S&T cooperation to comple-ment the many bilateral arrangements withindividual Member States and betweenindividual scientists. The S&T Agreementidentifies a number of topics highlyrelevant for transatlantic cooperation.Some actions are undertaken throughimplementing arrangements in selectedareas (e.g., environment, metrology,materials science—including nanotechnol-ogy non-nuclear and renewable energy,and biotechnology).

Through the Marie Curie Fellowship, theEU provides funding for Europeanresearchers to work outside Europe for twoyears. More than 200 researchers havealready come to the U.S. Similarly, fundingis available for non-Europeans to work inEurope. Thus far, 40 researchers havebenefited from this support.

Single Internal MarketThe single market is at the core of today’sEuropean Union. To make it happen, theEU institutions and the Member Statesworked doggedly for seven years from 1985to draft and adopt the hundreds of direc-tives needed to sweep away the technical,regulatory, legal, bureaucratic, and culturalbarriers that stifled free trade and freemovement within the Union.

The European Commission estimatesthat this remarkable achievement hascreated more than 2.5 million new jobssince 1993 and generated more than €800

billion in additional wealth. This is inaddition to a greater choice of goods andservices, lower prices for the EU’s 490million consumers, creation of economiesof scale and improved efficiency, and theenhanced capacity of European firms tocompete in today’s globalized markets.

The four freedoms of movement(enshrined in the Treaties)—for goods,services, people, and capital—are under-pinned by a range of supporting policies.Firms are prevented from fixing prices orcarving up markets among them by theEU’s robust antitrust policy. People canwork throughout the EU territory becauseMember States recognize many other indi-vidual Member States’ academic and pro-fessional certifications.

The creation of the single market gaveEuropean Union countries a strongerincentive to liberalize previously protectedmonopoly markets for utilities such astelecommunications, electricity, gas, andwater. The independent national regulatorswho supervise the now-liberalized marketsfor telecoms and energy coordinate theiractivity at EU level. Not just big industries,

but households and small businesses acrossEurope are increasingly able to choose theirsuppliers for electricity and gas.

Still, there is unfinished business. Theservices sector, for instance, has opened upmore slowly than markets for goods. Thishas been the case for a wide range offinancial services and for transportation.

More red tape must be eliminated—suchas those administrative and technicalbarriers to the free flow of goods andservices, including Member State reluc-tance to accept other Member Statestandards and norms or, at times, torecognize the equivalence of professionalqualifications. The fragmented nature ofnational tax systems also puts a brake onmarket integration and efficiency.

The good news is that these dangers havebeen recognized by Member States and theEuropean Commission, and remedialaction is under way, although neither at auniform pace nor in all sectors. Forfinancial services, the EU’s action plan todevelop an integrated market will cutborrowing costs for firms and consumers,and will offer savers a wider range of

i2010 Initiative

A new initiative i2010—the European Information Society 2010—is a five-year plan topromote “digital convergence” of communications networks, media content, and devices;increase spending on Information and Communications Technology (ICT) research by 80percent (with more than half from the private sector); and make digital services more inclusiveand accessible for all sectors of society. Information Society Commissioner Viviane Redingexplained the importance of i2010: “To enhance investment in this promising sector of theeconomy, we must provide a coherent regulatory framework for Europe’s digital economy thatis market-oriented, flexible, and future-proof.”




investment products—savings plans andpension schemes—which will be availablefrom the European supplier of their choice.

Telecommunications, the InformationSociety, and Media ServicesA liberalized telecommunications environ-ment is essential for Europe’s economicgrowth and transition to the informationsociety. The European Union fully liberal-ized telecommunications markets(including voice telephony and infrastruc-ture) in 1998, and played a key role in theconclusion of the World TradeOrganization’s 1998 basic telecommunica-tions agreement. Since this process began,there has been tremendous growth in newtechnologies and services, including mobilephones and the Internet. In July 2003, anew legal framework, designed to strength-en competition in electronic communica-tions and safeguard consumer interests,came into force.

eEurope. The eEurope initiative,launched in June 2002, aims to accelerateEurope’s transition to a knowledge-basedeconomy and to realize the potentialbenefits of higher growth, more jobs, andbetter access for all citizens to the newservices of the information age. eEuropeprovides a policy framework to moresharply focus existing programs and accel-erate adoption of relevant legislation.

The first phase—the eEurope 2002Action Plan—included 64 targets to beachieved by the end of 2002, with the

majority being completed successfully.eEurope 2005, launched in June 2002,focused on promoting a secure, broadbandinfrastructure, eBusiness, and public onlineservices (eHealth, eLearning, andeGovernment). A mid-term progressreport (February 2004) indicated steadyprogress in most areas, but concluded thatfurther effort was needed to share experi-ence and tailor services to user needs, andthat strong political leadership wasrequired. A May 2004 update proposed 15complementary actions to achieveeEurope’s specific objectives and speedprogress, while not substantially changingthe Action Plan’s balance or structure.

A new initiative i2010—the EuropeanInformation Society 2010—is a five-yearplan to promote “digital convergence” ofcommunications networks, media content,and devices; increase spending onInformation and CommunicationsTechnology (ICT) research by 80 percent(with more than half from the privatesector); and make digital services moreinclusive and accessible for all sectors ofsociety. Information SocietyCommissioner Viviane Reding explainedthe importance of i2010: “To enhanceinvestment in this promising sector of theeconomy, we must provide a coherent reg-ulatory framework for Europe’s digitaleconomy that is market-oriented, flexible,and future-proof.”

Several key indicators demonstrateimpressive progress: nearly half of the EU

population now uses the Internet regularly(47 percent). Three-quarters of 16–24 yearolds across the EU used the Internet atleast once a week in 2006. Mobile phoneuse in Europe is growing at an even fasterrate. According to the EuropeanCommission, 87 percent of the EU popula-tion is subscribed to mobile phones, upfrom 18 percent in 1998, and exceeding therate of less than 65 percent in the U.S.

TerrorismTerrorism is not a new phenomenon inEurope. In the United Kingdom, Ireland,and Spain alone, it has caused more than5,000 deaths in 30 years. It has becomeeven more international in recent years asclearly demonstrated by the bomb attacksin Madrid on March 11, 2004, and inLondon in July 2005. Terrorism takes manyforms and uses ever more sophisticatedand deadly organizational techniques andoperational methods. Bioterrorism andchemical threats are all too real. Well-organized terrorist groups are receivingsupport from sympathizer networks inmany countries, and have rear bases andsizable financial resources.

For the EU, terrorism is not a new policychallenge—it is a constant policy challenge.

In the wake of the September 11, 2001,attacks, the EU made the concerted fightagainst terrorism a top priority. Within 10days of the attack, the EU acted toestablish an EU-wide list defining acts ofterrorism and their commensurate

penalties. Additionally, the EU adopted aEuropean arrest warrant to replace thetraditional extradition procedures amongEU Member States.

Further, it defined a common concept ofterrorist offenses (now included by all EUMember States in their legal systems), andset the minimum level of penal sanctionsfor this type of offense, with the objectiveof preventing terrorists from finding refugein a more lenient jurisdiction.

Moreover, the EU has agreed collectivelyon a common list of terrorist organizationsand provided EUROPOL with additionalresources to analyze terrorist threats andfurther improve information exchange. In2002, EUROJUST was set up to facilitateinteraction between the judicial authoritiesof the different Member State legalsystems, through international mutual legalassistance, extradition requests, and cross-border criminal investigations.

The struggle against terrorism requiresthe mobilization of all citizens, and in thisspirit of increasing awareness, March 11has been designated as the officialEuropean Day of Commemoration of theVictims of Terrorism.

The terrorist networks cross nationalborders and hence have an internationaldimension. The United States and the EU have resolved to work together tocombat terrorism.

Joint efforts include intelligence sharing,extensive law enforcement and judicialcooperation, curtailing terrorist financing,




and enhancing trade and transportsecurity. Agreements on the transfer ofpassenger information held by airlines toU.S. Customs and Border Protection, coop-eration on the security of shipping con-tainers, and the periodic high-level talksbetween senior officials on both sides ofthe Atlantic represent just some of thesecommon efforts. Cooperation betweenEUROPOL and the U.S. authorities toexchange intelligence and information isyet another example.

In addition, both the EU and the U.S. areworking on global standards that othernations can adopt to impede terrorism.The EU and its Member States also workon global terrorism issues with organiza-tions such as the United Nations, theOrganization for Security and Cooperationin Europe (OSCE), the G-8, and theInternational Atomic Energy Agency.

Trade and CustomsThe EU has a common trade policy knownas the “Common Commercial Policy.” EUMember States agree to transfer compe-tence (jurisdiction) to the Union in mattersof external trade. Consequently, the EUfunctions as a single actor in trade matters,with the European Commission negotiat-ing trade agreements and representingEuropean interests on behalf of the Union’s27 Member States at bilateral and multilat-eral levels, including the WTO.

Within the Union, Member States haveremoved all tariffs on trade, while having

unified tariffs on imports from outside theEU—the EU27 maintain a “commonexternal tariff.” This means that the sametariff is paid on products regardless ofwhich EU country is the entry point to theEU market, and once customs proceduresare complete, goods can be shippedthroughout the EU without additionalduties. The achievement of this “customsunion” in 1968 is one of the EU’s earliestmilestones.

EU customs authorities are also tacklingnew challenges—ensuring the smooth flowof trade while protecting the environmentand citizens’ health and safety. Customsauthorities are on the front lines in thefight against terrorism and organizedcrime. Transatlantic cooperation in theseareas is particularly active, with EU andU.S. customs officials working together toensure container security and combatcounterfeiting.

Externally, the EU’s basic philosophy is toopen its market to trading partners who dolikewise, with preferential treatment fordeveloping and least developed countries.Because harmonization of trade policieswas central to European integration, theEU has been a key player along with itstrading partners in the successive rounds ofinternational negotiations on trade liberal-ization. The EU has played a leading rolewithin the General Agreement on Tariffsand Trade (GATT) and its successor, theWorld Trade Organization. The EU hastaken an active role in the round of inter-

national trade negotiations known as theDoha Development Agenda (DDA).

The current WTO trade round—theDoha Development Agenda—provides agood example of how trade policy is coor-dinated in practice. The Commission setsand carries forward the EU priorities andobjectives as spelled out in guidelines fromthe Council of the EU. Officials from theCommission’s Directorate-General forTrade, under the Trade Commissioner’sauthority, are charged with actually con-ducting the negotiations, and speak onbehalf of the EU as a whole. Coordinationwith Member States is assured at all times,while the Commission keeps the EuropeanParliament regularly informed. At the endof the Round, the Council must formallyagree to the outcome.

TransportA free flow of goods and people acrossnational borders is essential for all 27 EUMember States. Considerable progress hasbeen achieved in deregulating road, rail,air, and maritime services; improvingaccess to the market; and applying compe-tition rules. Widespread benefits haveresulted: trucks that take goods into oneEU country can reload for the return tripinstead of coming back empty; the airtravel industry has experienced more com-petition and lower fares; and liberalizationof rail infrastructure that started in 2003opened to competition 70 to 80 percent ofrail freight traffic over main lines.

Among the Commission’s goals set out ina 2001 White Paper on transport: improverail service to attract more passengers andshippers, integrate European air trafficcontrol structures to reduce flight delays,invest more in waterways, improve portservices and maritime safety standards, andintegrate ticketing and baggage handlingfor dual-mode journeys.

A mid-term review in 2006 found thatpolicy needed to adapt to changed circum-stances, including an enlarged EU, risingenergy costs, and Kyoto commitments. Thereview called for a freight logistics actionplan, intelligent transport systems, makingmobility greener and more efficient, adebate on urban mobility and how to effectchanges, and an ambitious program forgreen power in trucks and cars.

Galileo, the EU’s independent satellitenavigation system, is an important tool forsupporting the EU’s main transport policyobjectives. Galileo services will be used inevery transport domain, from aviation tomaritime to road, rail, and pedestrian.Galileo’s guarantee of reliable satellite posi-tioning services will help provide answersto current mobility and transportproblems in the EU, and it will lead toimproved safety and comfort.




For additional information on all EUpolicy areas, please see:http://europa.eu/index_en.htm

Summaries of EU legislation in all policyareas can be found at:http://europa.eu/scadplus/scad_en.htm .

Chronology: Milestones on theRoad to European IntegrationMay 9, 1950 French Foreign Minister Robert Schumanproposes pooling Europe’s coal and steelindustries.

April 18, 1951European Coal and Steel Community(ECSC) Treaty signed in Paris by Belgium,France, Germany, Italy, Luxembourg, andthe Netherlands (enters into force 1952).

March 25, 1957 European Economic Community (EEC)and European Atomic Energy Community(EURATOM) Treaties signed in Rome(enters into force 1958).

April 8, 1965Treaty signed merging the institutions ofthe three European Communities: theEuropean Coal and Steel Community, theEuropean Economic Community, and theEuropean Atomic Energy Community(enters into force 1967).

July 1, 1968 Customs union completed.

January 1, 1973 Denmark, Ireland, and the UnitedKingdom join the Community.

February 28, 1975First Lomé Convention with African,Caribbean, and Pacific (ACP) countriessigned.

March 13, 1979European Monetary System (EMS)becomes operational.

January 1, 1981 Greece joins the European Community.

June 29, 1985European Council endorses “WhitePaper” plan to complete single market by end of 1992.

January 1, 1986 Spain and Portugal join the Community.

July 1, 1987 Single European Act (SEA), which, (amongother innovative measures) provided forthe creation of a single internal market,enters into force.

June 26-27, 1989 Madrid European Council endorses planfor Economic and Monetary Union (EMU).

November 9, 1989Fall of the Berlin Wall

October 3, 1990 The five Laender of the former GermanDemocratic Republic enter theCommunity as part of a united Germany.

October 21, 1991 European Community and European FreeTrade Association (EFTA) agree to formthe European Economic Area (EEA). EEAin force January 1, 1994.

December 8, 1991Dissolution of USSR-Formation ofCommonwealth of Independent States.

December 11, 1991 European Council meeting in Maastrichtagrees on Treaty on European Union,which enters into force November 1, 1993.

December 16, 1991Poland, Hungary, and Czechoslovakia signthe first Europe Agreements on trade andpolitical cooperation.

January 1, 1993 European single market is achieved onschedule.

January 1, 1995 Austria, Finland, and Sweden join theEuropean Union.

November 27-28, 1995The Euro-Mediterranean Conference ofMinisters of Foreign Affairs, held inBarcelona marked the starting point of theEuro-Mediterranean Partnership(Barcelona Process), a wide framework ofpolitical, economic and social relationsbetween the Member States of theEuropean Union and Partners of theSouthern Mediterranean.

December 3, 1995The EU-U.S. Summit in Madrid launchedthe New Transatlantic Agenda (NTA),providing a new framework for the transat-lantic partnership, moving it from one ofconsultation to one of joint action in fourmajor fields: promoting peace and stability,democracy, and development around theworld; responding to global challenges;contributing to the expansion of worldtrade and closer economic relations; andbuilding bridges across the Atlantic.

June 17, 1997 Treaty of Amsterdam is concluded, andenters into force May 1, 1999.

March 12, 1998 European conference in London launchesEurope-wide consultations on issuesrelated to Common Foreign and SecurityPolicy and Justice and Home Affairs.

May 2, 1998Eleven EU Member States qualify to launchthe euro on January 1, 1999.

June 1, 1998 European Central Bank (ECB) inauguratedin Frankfurt, Germany.

January 1, 1999 EMU and euro launched in 11 EU countries.

June 23, 2000A new partnership agreement (2000-2020)between the EU and the ACP countries issigned in Cotonou, Benin.


Annexes


December 7–11, 2000EU leaders formally proclaim the Charterof Fundamental Rights of the EuropeanUnion.

January 1, 2001Greece joins the euro area.

February 26, 2001Regulation adopted establishing the RapidReaction Force.

February 26, 2001Treaty of Nice signed, and enters into forceFebruary 1, 2003.

January–February 2002 The euro becomes legal tender and perma-nently replaces national currencies in EMUcountries.

January 1, 2003First European Security and Defense Policymission launches with the deployment of500 European Union Police Missionofficers to Bosnia-Herzegovina to trainlocal police officers and establish sustain-able policing arrangements.

December 2003EU leaders adopt a European SecurityStrategy.

May 1, 2004Cyprus, Czech Republic, Estonia, Hungary,Latvia, Lithuania, Malta, Poland, SlovakRepublic, and Slovenia become EUMember States.

June 2004European Council endorses EuropeanNeighborhood Policy.

October 29, 2004The Treaty establishing the Constitutionfor Europe is signed by Heads of State andGovernment and EU foreign ministers.Constitution requires approval by MemberStates.

June 16-17, 2005European Council-Heads of State andGovernment, following the French andDutch negative referenda on theConstitutional Treaty, agree to a period ofreflection in order to determine how bestto proceed with the Constitutionalprocess, expecting to render an assessmentby mid-2006.

October 3, 2005Accession negotiations begin with Croatiaand Turkey.

January 1, 2007Bulgaria and Romania join the EU andcomplete the fifth round of enlargement.

Slovenia adopts the euro.


Annexes


EU Agencies Community Fisheries Control Agency(CFCA), Brussels, Belgium

Community Plant Variety Office (CPVO),Angers, France

European Agency for Management ofOperational Cooperation at the ExternalBorders of the EU (FRONTEX), Warsaw,Poland

European Agency for Reconstruction(EAR), Thessaloniki, Greece

European Agency for Safety and Health atWork (EU-OSHA), Bilbao, Spain

European Aviation Safety Agency (EASA),Koeln, Germany

European Defense Agency (EDA), Brussels,Belgium

European Center for Disease Preventionand Control (ECDC), Solna, Sweden

European Center for the Development ofVocational Training (CEDEFOP),Thessaloniki, Greece

European Environment Agency (EEA),Copenhagen, Denmark

European Food Safety Authority (EFSA),Parma, Italy

European Foundation for theImprovement of Living and WorkingConditions (E.FOUND), Dublin, Ireland

European Judicial Cooperation Unit(EUROJUST), The Hague, Netherlands

European Maritime Safety Agency(EMSA), Brussels, Belgium

European Medicines Agency (EMEA),London, U.K.

European Monitoring Center for Drugsand Drug Addiction (EMCDDA), Lisbon,Portugal

European Monitoring Center on Racismand Xenophobia (EUMC), Vienna, Austria

European Union Agency for FundamentalRights (successor to EUMC in 2007)

European Network and InformationSecurity Agency (ENISA), Heraklion,Crete, Greece

European Police College (CEPOL),Bramshill, United Kingdom

European Police Office (EUROPOL), TheHague, The Netherlands

European Railway Agency (ERA), tem-porarily in Brussels, Belgium; eventually inLille/Valenciennes, France

European Training Foundation (ETF),Turin, Italy

European Union Institute for SecurityStudies (EUISS), Paris, France

European Union Satellite Center (EUSC),Torrejón, Spain

Office for Harmonization in the InternalMarket (trademarks and designs) (OHIM),Alicante, Spain

Translation Center for the Bodies of theEuropean Union (CDT), Luxembourg

EU Acronyms and AbbreviationsACP-African, Caribbean and Pacificcountries

ASEM-Asia-Europe Meeting

CAP-Common Agricultural Policy

CARDS-Community Assistance forReconstruction Development andStabilization

CCP-Common Commercial Policy

CFSP-Common Foreign and SecurityPolicy

COPS-Political and Security Committee

COR-Committee of the Regions

COREPER-Council’s Committee ofPermanent Representatives

DG-Directorate-General

EAEC-European Atomic EnergyCommunity (also EURATOM)

EAGGF-European Agricultural Guidanceand Guarantee Fund

EC-European Community

EC-European Commission

ECA-European Court of Auditors

ECB-European Central Bank

ECHO-European CommissionHumanitarian Aid Office

ECJ-European Court of Justice

ECFIN-Economic and Finance Council

ECSC-European Coal and SteelCommunity

EEA-European Environment Agency

EEA-European Economic Area

EEC-European Economic Community

EIB-European Investment Bank

EJN-European Judicial Network

EMS-European Monetary System

EMU-Economic and Monetary Union

ENP-European Neighborhood Policy

EPC-European Political Cooperation

EP-European Parliament

ERDF-European Regional DevelopmentFund

ERM-Exchange Rate Mechanism

EESC-European Economic and SocialCommittee


Annexes


ESCB-European System of Central Banks

ESDP-European Security and DefensePolicy

ESF-European Social Fund

EU-European Union

EUPM-European Union Police Mission

EUR-The euro

EURATOM-European Atomic EnergyCommunity (also EAEC)

EUROMED-EU-MediterraneanPartnership

FIFG-Financial Instrument for FisheriesGuidance

FSJ-Freedom, Security, Justice

GATT-General Agreement on Tariffs andTrade

GCC-Gulf Cooperation Council

GDP-Gross Domestic Product

GMO-Genetically Modified Organism

GSP-Generalized System of Preferences

IGC-Intergovernmental Conference

ISPA-Instrument for Structural Polices forPre-accession Programs

JHA-Justice and Home Affairs

JRC-Joint Research Center

MEDA-EU financial instrument for Euro-Mediterranean Partnership

MEPP-Middle East Peace Process

MEP-Member of the European Parliament

MRA-Mutual Recognition Agreement

NTA-New Transatlantic Agenda

PCA-Partnership and CooperationAgreement

PHARE-Originally: Action Plan forCoordinated Aid to Poland and Hungaryfor Economic Reconstruction; thereafter, apre-accession instrument to assist CentralEuropean applicant countries

QMV-Qualified Majority Voting

R&TD-Research and TechnologicalDevelopment

SAA-Stabilization and AssociationAgreements

SAP-Stabilization and Association Process

SAPARD-Special Accession Program forAgriculture and Rural Development

SEA-Single European Act

SEE-Southeast Europe

TABD-Transatlantic Business Dialogue

TACD-Transatlantic Consumer Dialogue

TACIS-Technical Assistance to the

Commonwealth of Independent States

TCAA-Transatlantic Common AviationArea

TEMPUS-Trans-European MobilityScheme for University Students

TEN-Trans-European Networks

TEP-Transatlantic Economic Partnership

TLD-Transatlantic Legislators’ Dialogue

UNMiK-United Nations Mission inKosovo

WEU-Western European Union

WTO-World Trade Organization

Annexes

More information:http://www.eurunion.org



EU symbols

European flagThe 12 stars in a circle symbolize theideals of perfection, completeness, andunity. The number of stars does notreflect the number of members.

European anthemThe melody comes from the Ode toJoy theme from the final movement ofBeethoven’s Ninth Symphony. Whenused as the European anthem, thistune is played without the words.

Europe DayThe ideas behind what is now theEuropean Union were first putforward on May 9, 1950, in a speechby the French Foreign MinisterRobert Schuman. May 9 is celebratedeach year as the EU’s birthday, calledEurope Day.

Motto of the EU“United in diversity”

Anthony SmallwoodHead, Press and Public DiplomacyEditor-in-Chief

Ben HarrisonMelinda StevensonSenior Editors

Sandi AumanPhoto Editor

Manuscript completed February 2007with minor updates in October 2007

Copyright © 2007 by the Delegation of the European Commission to the USA

ISBN 92-79-00379-8

Catalogue Number IQ 70-07-996-EN-C




EuropeanUnionThe

A G U I D E F O R A M E R I C A N S

Delegation of the European Commission to the USA

2300 M Street, NW

Washington, DC 20037

www.eurunion.org


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