European UnionEuropean Union

ByBy

Flora WangFlora Wang

Travis PierceTravis Pierce

European UnionEuropean Union

The most integrated economy todayThe most integrated economy todayFounded upon numerous treaties and has Founded upon numerous treaties and has

undergone several expansionsundergone several expansionsGrow from 6 member states to 27Grow from 6 member states to 27Generates 30% of the nominal gross world Generates 30% of the nominal gross world

productproduct16/27 member states use the same 16/27 member states use the same

currency – the eurocurrency – the euro

History of FormationHistory of Formation

1951 – 1951 – Treaty of Paris forms the European Treaty of Paris forms the European

Coal and Steel Community (ECSC)Coal and Steel Community (ECSC)

Regulate European industry & improve Regulate European industry & improve

commerce, after WWIIcommerce, after WWII

Six founding states:Six founding states:

BelgiumBelgium ItalyItaly

FranceFrance LuxembourgLuxembourg

GermanyGermany NetherlandsNetherlands

History of Formation History of Formation contd.contd.

1957 – 1957 – Treaty of Rome forms:Treaty of Rome forms:

The European Economic Community (EEC)The European Economic Community (EEC)

The European Atomic Energy CommunityThe European Atomic Energy Community

Common MarketCommon Market

Abolition of internal tariff barriers was achieved in 1968Abolition of internal tariff barriers was achieved in 1968

Original six founding membersOriginal six founding members

Worked concurrently with ECSCWorked concurrently with ECSC

History of Formation History of Formation contd.contd.

Enlargement AccededEnlargement Acceded

1973: United Kingdom, Denmark, and Ireland1973: United Kingdom, Denmark, and Ireland

1981: Greece1981: Greece

1986: Spain and Portugal1986: Spain and Portugal

History of Formation History of Formation contd.contd.

Enlargement Did Not AccedeEnlargement Did Not Accede

1973: Norway applied & accepted1973: Norway applied & acceptedGovernment lost on national referendumGovernment lost on national referendum

1987: Morocco and Turkey applied1987: Morocco and Turkey appliedMorocco – turned down – not considered EuropeanMorocco – turned down – not considered European

Turkey – acceptedTurkey – accepted

Received candidate status in 2000Received candidate status in 2000

Began officially membership negotiations in 2004Began officially membership negotiations in 2004

History of Formation History of Formation contd.contd.

1992 – 1992 – Maastricht Treaty SignedMaastricht Treaty Signed

1993 – European Union (EU) formed out of the old 1993 – European Union (EU) formed out of the old

EECEEC

Later EnlargementLater Enlargement

1995 – Finland, Sweden, and Austria1995 – Finland, Sweden, and Austria

2004 – Cyprus, Czech Republic, Estonia, Hungary, 2004 – Cyprus, Czech Republic, Estonia, Hungary,

Latvia, Lithuania, Malta, Poland, Slovakia, SloveniaLatvia, Lithuania, Malta, Poland, Slovakia, Slovenia

2007 – Romania and Bulgaria2007 – Romania and Bulgaria

EU in Economic IntegrationEU in Economic Integration

1.1. Preferential Trading AreaPreferential Trading Area2.2. Free Trade AreaFree Trade Area3.3. Customs UnionCustoms Union

4.4. Common MarketCommon Market

European UnionEuropean Union

5.5. Economic and Monetary UnionEconomic and Monetary Union6.6. Complete Economic IntegrationComplete Economic Integration

EuroEuro

Eurozone – currency union of 16 EU statesEurozone – currency union of 16 EU states Adopted the euro as the sole legal tenderAdopted the euro as the sole legal tender

AustriaAustria FranceFrance ItalyItaly PortugalPortugal

BelgiumBelgium GermanyGermany LuxembourgLuxembourg SlovakiaSlovakia

CyprusCyprus GreeceGreece MaltaMalta SloveniaSlovenia

FinlandFinland IrelandIreland NetherlandsNetherlands SpainSpain

Euro Euro contd.contd.

Euro used in other countriesEuro used in other countriesWith Formal AgreementWith Formal AgreementUse euro as official currency and mint coinsUse euro as official currency and mint coins

MonacoMonacoSan MarinoSan MarinoVaticanVatican

Without Formal AgreementWithout Formal AgreementAndorraAndorraMontenegroMontenegroKosovoKosovo

European Central BankEuropean Central Bank

Responsible for Responsible for monetary policy monetary policy covering covering

the 16 member states of the Eurozonethe 16 member states of the Eurozone

No common No common representationrepresentation, , governancegovernance, ,

or or fiscal policyfiscal policy for the currency union for the currency union

European Central Bank European Central Bank contd.contd.

Only one primary objectiveOnly one primary objectiveMaintain price stability within the EurozoneMaintain price stability within the Eurozone (inflation of below, but close to 2%)(inflation of below, but close to 2%)

Exclusive right to authorize the issuance of Exclusive right to authorize the issuance of euro banknoteseuro banknotes

Member States can issue euro coins but Member States can issue euro coins but the amount must be authorized by ECB the amount must be authorized by ECB

European Central Bank European Central Bank contd.contd.

Key tasksKey tasks

Define & implement the monetary policyDefine & implement the monetary policy

Conduct foreign exchange operationsConduct foreign exchange operations

Take care of the foreign reserves of the Take care of the foreign reserves of the

European System of Central BanksEuropean System of Central Banks

Promote smooth operation of the money market Promote smooth operation of the money market

infrastructureinfrastructure

Who Runs the European Union Who Runs the European Union

The EU is run by the European The EU is run by the European Commission Commission

The European commission is responsible The European commission is responsible for:for:

proposing legislation, proposing legislation, implementing decisions, implementing decisions, upholding the Union’s treaties upholding the Union’s treaties and the general day-to-day running of the and the general day-to-day running of the

Union. Union.

Who Runs the European Who Runs the European CommissionCommission

The president of the European The president of the European Commission is José Manuel Barroso Commission is José Manuel Barroso

The commission has 27 Commissioners, The commission has 27 Commissioners, one for each member stateone for each member state

President Barroso is one of the 27 President Barroso is one of the 27 commissioners and started his term in commissioners and started his term in 2004 and is serving a five year term2004 and is serving a five year term

The State of EU The State of EU Commission President José Manuel Barroso has Commission President José Manuel Barroso has outlined ways for the EU to survive the economic crisis. outlined ways for the EU to survive the economic crisis. ““Today we are asking EU leaders to agree on a Today we are asking EU leaders to agree on a comprehensive action plan. To do everything possible to comprehensive action plan. To do everything possible to protect our citizens from unemployment. To clean up protect our citizens from unemployment. To clean up financial markets on the basis of the de Larosière financial markets on the basis of the de Larosière Report. And to pave the way for Europe to lead by Report. And to pave the way for Europe to lead by example and by persuasion as we approach the G20 example and by persuasion as we approach the G20 summit in London." summit in London."

The Banking SystemThe Banking System

The commission has urged the European The commission has urged the European banks to restore confidence to promote banks to restore confidence to promote lending to start flowing againlending to start flowing again

One of the major recommendations is to One of the major recommendations is to have the banks remove the impaired have the banks remove the impaired assists from the banks balance sheets assists from the banks balance sheets

Financial regulation and Financial regulation and supervisionsupervision

the key principles are set by the de Larosière Group the key principles are set by the de Larosière Group The Larosiere Group is run by Jacques De Larosiere, The Larosiere Group is run by Jacques De Larosiere,

who is the Chairman of the High Level Group on cross – who is the Chairman of the High Level Group on cross – boarder financial supervisionboarder financial supervision

They would be responsible for the regulation of the EU’s They would be responsible for the regulation of the EU’s financial regulation and supervisionfinancial regulation and supervision

bring forward initiatives already in the pipeline on hedge bring forward initiatives already in the pipeline on hedge funds, private equity and remuneration structures funds, private equity and remuneration structures

Outline new supervisory framework and on issues Outline new supervisory framework and on issues including: liquidity risk and excessive leverage; further including: liquidity risk and excessive leverage; further reinforcing protection for depositors and policy holders; reinforcing protection for depositors and policy holders; and effective sanctions against wrongdoingand effective sanctions against wrongdoing

The Real Economy The Real Economy

Expect an overall GDP of 3.3% for the 2009 – Expect an overall GDP of 3.3% for the 2009 – 2010 period2010 period

This is attributed to the European Recovery PlanThis is attributed to the European Recovery Plan The goal is to build on a low carbon economy The goal is to build on a low carbon economy

and with returning to sustainable public finances and with returning to sustainable public finances as soon as possible.as soon as possible.

The EU has targeted an investment of €5 billion The EU has targeted an investment of €5 billion euros in energy interconnections and euros in energy interconnections and broadband.broadband.

Employment Employment

The Unemployment rate is estimated to be 10% The Unemployment rate is estimated to be 10% by 2010by 2010

Member states should implement measures Member states should implement measures such as financial support for temporary working-such as financial support for temporary working-time arrangements, boosting income support for time arrangements, boosting income support for unemployed people, lowering non-wage costs unemployed people, lowering non-wage costs for employers and boosting investment in skills for employers and boosting investment in skills and retraining. and retraining.

rapid approval of its proposal of €1.8 billion in rapid approval of its proposal of €1.8 billion in advance payments under the European Social advance payments under the European Social Fund is neededFund is needed

Promoting global recoveryPromoting global recovery

The EU should make a united push to focus on: The EU should make a united push to focus on: better transparency and accountability; better transparency and accountability;

appropriate regulation of all financial actorsappropriate regulation of all financial actors tackling difficulties caused by uncooperative tackling difficulties caused by uncooperative

jurisdictions jurisdictions boosting international supervisory cooperation; boosting international supervisory cooperation;

and reforming the IMF, Financial Stability Forum and reforming the IMF, Financial Stability Forum and World Bank. and World Bank.

Concerns Concerns

The EU has failed to consolidate and The EU has failed to consolidate and strengthen its political union strengthen its political union

They also have not taken adequate action They also have not taken adequate action to alleviate the “democratic deficit”to alleviate the “democratic deficit”

The EU has grown to fast and has not The EU has grown to fast and has not updated its decision-making structureupdated its decision-making structure

There is no constitution which makes even There is no constitution which makes even simple decisions toughsimple decisions tough

ContCont

The economic union has intensified and The economic union has intensified and they have become enormously integrated they have become enormously integrated with one another with one another

The EU has created a single market but in The EU has created a single market but in the process of creating this single market the process of creating this single market they did not create a governing system to they did not create a governing system to regulate the market regulate the market

Because of the current economic situation Because of the current economic situation this has become a glaring weaknessthis has become a glaring weakness

ContCont

Many believe the biggest problem is that the Many believe the biggest problem is that the citizens in the EU don’t understand the citizens in the EU don’t understand the importance of the EU and don’t care much about importance of the EU and don’t care much about what the EU is doingwhat the EU is doing

Public support in many countries has soured Public support in many countries has soured and given way to people supporting there own and given way to people supporting there own countries and not the Unioncountries and not the Union

This has lead to some countries citizens to call This has lead to some countries citizens to call for protectionism for there goods and services for protectionism for there goods and services

Gideon RachmanGideon Rachman

A British EU skeptic who in 2001 warned of A British EU skeptic who in 2001 warned of potential problems with the growth of the EU:potential problems with the growth of the EU:

He believed people would be more loyal to their He believed people would be more loyal to their home lands then the Union in times of turmoil home lands then the Union in times of turmoil

He believed in a crisis, nationalist instincts would He believed in a crisis, nationalist instincts would come to the forefront come to the forefront

He also expected the euro could run into troubleHe also expected the euro could run into trouble

RachmanRachman

Many of Rachman’s insights are coming Many of Rachman’s insights are coming truetrue

The strain of the economic crisis has The strain of the economic crisis has opened up divisions with in the union thus opened up divisions with in the union thus causing the EU to call an emergency causing the EU to call an emergency meeting to combat protectionismmeeting to combat protectionism

Several new members of the union are Several new members of the union are facing banking crisis and old members of facing banking crisis and old members of the union have refused to bail them out the union have refused to bail them out

Fears Fears The fear is that all of the unrest will cause the The fear is that all of the unrest will cause the

union to start rolling back the four freedoms union to start rolling back the four freedoms already established by the EU:already established by the EU:

Free movement of goods:Free movement of goods: People People Services Services Capital Capital Many fear that a restriction in any of these Many fear that a restriction in any of these

freedoms would cause panic amongst the EU freedoms would cause panic amongst the EU members thus creating a more unsettled members thus creating a more unsettled economic situation economic situation

Cont.Cont.

The fears of the EU collapsing are legitimate but The fears of the EU collapsing are legitimate but not likelynot likely

The EU still provides a free and peaceful way of The EU still provides a free and peaceful way of lifelife

It also offers “the right to live and work anywhere It also offers “the right to live and work anywhere in Europe; the right to make a business deal in Europe; the right to make a business deal without the government stopping you; the right without the government stopping you; the right to hop on a train to Paris or a plane to Madrid to hop on a train to Paris or a plane to Madrid with out being hassled at immigration” with out being hassled at immigration” (Rachman)(Rachman)

Conclusion Conclusion

It is up to the European Commission to hold the It is up to the European Commission to hold the Union togetherUnion together

The EU will have to fight off the panic of the The EU will have to fight off the panic of the more established nations who will fight for more established nations who will fight for protectionism and nationalism to gain favor with protectionism and nationalism to gain favor with their citizenstheir citizens

If they can do this the EU stands a good chance If they can do this the EU stands a good chance to survive and learn from its past misgivings to survive and learn from its past misgivings

Resources Resources http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/351

&format=HTML&aged=0&language=EN&guiLanguage=en http://ec.europa.eu/publications/booklets/eu_glance/66/en.pdf http://en.wikipedia.org/wiki/European_Commission http://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/European_Union http://en.wikipedia.org/wiki/Enlargement_of_the_European_Unionhttp://en.wikipedia.org/wiki/Enlargement_of_the_European_Union http://en.wikipedia.org/wiki/Eurozonehttp://en.wikipedia.org/wiki/Eurozone http://en.wikipedia.org/wiki/European_Central_Bankhttp://en.wikipedia.org/wiki/European_Central_Bank http://www.epp-ed.eu/Press/showpr.asp?http://www.epp-ed.eu/Press/showpr.asp?

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