CHAPTER – I

INTRODUCTION OF EUROPEAN UNION

Economic integration is the unification of economic policies between different states through

the partial or full abolition of tariff and non-tariff restrictions on trade taking place among them

prior to their integration. This is meant in turn to lead to lower prices for distributors and

consumers with the goal of increasing the combined economic productivity of the states.

The trade stimulation effects intended by means of economic integration are part of the

contemporary economic Theory of the Second Best: where, in theory, the best option is free

trade, with free competition and no trade barriers whatsoever. Free trade is treated as an idealistic

option, and although realized within certain developed states, economic integration has been

thought of as the “second best” option for global trade where barriers to full free trade exist.

Definition

EU. The economic association of over two dozen European countries which seek to create a

unified, barrier-free market for products and services throughout the continent, as well as

a common currency with a unified authority over that currency. The European Union was

established in 1993 by the Treaty of Maastricht, and was based on the European Economic

Community. The EU is formed of three areas, or pillars, which are the European Community,

Common Foreign and Security Policy, and Police and Judicial Co-operation in Criminal Matters.

The EU has a wide variety of legislative bodies, including the European Parliament, the Council

of the European Union, and the European Commission. The European Court of Justice and the

Court of First Instance are the two main judicial bodies for the European Union. The format

and principles of the EU have their roots in the European Coal and Steel Community, created in

the early 1950s.

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Objective

The increase of trade integration can be traced to the 1930s and 1940s.[1] Fritz Machlup credits

Eli Heckscher, Herbert Gaedicke and Gert von Eyern as the first users of the term economic

integration in its current sense. According to Machlup, such usage first appears in the 1935

English translation of Hecksher’s 1931 book Mercantilism (Mercantilism in English), and

independently in Gaedicke’s and von Eyern’s 1933 two-volume between member states of

economic unions is meant to lead to higher productivity. This is one of the reasons for the global

scale development of economic integration, a phenomenon now realized in continental economic

blocks such as ASEAN, NAFTA, SACN, the European Union, and the Eurasian Economic

Community; and proposed for intercontinental economic blocks, such as the Comprehensive

Economic Partnership for East Asia and the Transatlantic Free Trade Area.

Comparative advantage refers to the ability of a person or a country to produce a particular good

or service at a lower marginal and opportunity cost over another. Comparative advantage was

first described by David Ricardo who explained it in his 1817 book On the Principles of Political

Economy and Taxation in an example involving England and Portugal.[3] In Portugal it is

possible to produce both wine and cloth with less labor than it would take to produce the same

quantities in England.

However the relative costs of producing those two goods are different in the two countries. In

England it is very hard to produce wine, and only moderately difficult to produce cloth. In

Portugal both are easy to produce. Therefore while it is cheaper to produce cloth in Portugal than

England, it is cheaper still for Portugal to produce excess wine, and trade that for English cloth.

Conversely England benefits from this trade because its cost for producing cloth has not changed

but it can now get wine at a lower price, closer to the cost of cloth. The conclusion drawn is that

each country can gain by specializing in the good where it has comparative advantage, and

trading that good for the other.

Economies of scale refers to the cost advantages that an enterprise obtains due to expansion.

There are factors that cause a producer’s average cost per unit to fall as the scale of output is

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increased. Economies of scale are a long run concept and refer to reductions in unit cost as the

size of a facility and the usage levels of other inputs increase.[4] Economies of scale is also a

justification for economic integration, since some economies of scale may require a larger

market than is possible within a particular country — for example, it would not be efficient for

Liechtenstein to have its own car maker, if they would only sell to their local market. A lone car

maker may be profitable, however, if they export cars to global markets in addition to selling to

the local market.

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CHAPTER – II

A DETAIL STUDY ON EUROPEAN UNION

Stages

Stages of economic integration around the World:

(Each country colored according to the most advanced agreement that it participates into.)

  Economic and Monetary Union (CSME/EC$, EU/€)

  Economic union (CSME, EU)

  Customs and Monetary Union (CEMAC/franc, UEMOA/franc)

  Common market (EEA, EFTA, CES)

  Customs union (CAN, CUBKR, EAC, EUCU, MERCOSUR, SACU)

  Multilateral Free Trade Area (AFTA, CEFTA, CISFTA, COMESA, GAFTA, GCC, NAFTA,

SAFTA, SICA, TPP)

4

Free trade around the World:

  Multilateral free trade agreements or more advanced agreements

  Bilateral free trade agreements advanced agreements

  No free trade agreements, but World Trade Organization members

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A world map of World Trade Organization participation:

  Members

  Members, dually represented with the European Union

  Observer

  Non-member

The degree of economic integration can be categorized into seven stages:

1. Preferential trading area

2. Free trade area, Monetary union

3. Customs union, Common market

4. Economic union, Customs and monetary union

5. Economic and monetary union

6. Fiscal union

7. Complete economic integration

These differ in the degree of unification of economic policies, with the highest one being the

political union of the states.

A "free trade area" (FTA) is formed when at least two states partially or fully abolish custom

tariffs on their inner border. To exclude regional exploitation of zero tariffs within the FTA there

is a rule of certificate of origin for the goods originating from the territory of a member state of

an FTA.

A "customs union" introduces unified tariffs on the exterior borders of the union (CET, common

external tariffs). A "monetary union" introduces a shared currency. A "common market" add to a

FTA the free movement of services, capital and labor.

An "economic union" combines customs union with a common market. A "fiscal union"

introduces a shared fiscal and budgetary policy. In order to be successful the more advanced

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integration steps are typically accompanied by unification of economic policies (tax, social

welfare benefits, etc.), reductions in the rest of the trade barriers, introduction of supranational

bodies, and gradual moves towards the final stage, a "political union".

WHAT IS THE EU

• DETERMINED to lay the foundations of an ever closer union among the peoples of Europe.

• RESOLVED to ensure the economic and social progress of their countries by common action

to eliminate the barriers which divine Europe.

• AFFIRMING as the essential objective of their efforts the constant improvements of the living

and working conditions of their peoples,

• RECOGNIZING that the removal of existing obstacles calls for concerted action in order to

guarantee steady expansion, balanced trade and fair competition,

• ANXIOUS to strengthen the unity of their economies and to ensure their harmonious

development by reducing the differences existing between the various regions and the

backwardness of the less favored regions,

• DESIRING to contribute, by means of a common commercial policy, to the progressive

abolition of restrictions on international trade,

• INTENDING to confirm the solidarity which binds Europe and the overseas countries and

desiring to ensure the development of their prosperity, in accordance with the principles of the

Charter of the United Nations,

• RESOLVED by thus pooling their resources to preserve and strengthen peace and liberty, and

calling upon the other peoples of Europe who share their ideal to join in their efforts,

• HAVE DECIDED to create a EUROPEAN COMMUNITY

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The Preamble to the Treaty of Rome, 1957

The European Union

The European Union (EU) was created by the Maastricht Treaty on November 1st 1993. It is a political

and economic union between European countries which makes its own policies concerning the members’

economies, societies, and laws and to some extent security. To some, the EU is an overblown bureaucracy

which drains money and compromises the power of sovereign states. For others, the EU is the best way to

meet challenges smaller nations might struggle with – such as economic growth or negotiations with

larger nations – and worth surrendering some sovereignty to achieve. Despite many years of integration,

opposition remains strong, but states have acted pragmatically, at times, to create the union.

Origins of the EU

The European Union was not created in one go by the Maastricht Treaty, but was the result of gradual

integration since 1945, an evolution when one level of union has been seen to work, giving confidence

and impetus for a next level. In this way the EU can be said to have been formed by the demands of its

member nations.The end of the Second World War left Europe divided between the communist, Soviet

dominated, eastern bloc, and the largely democratic western nations. There were fears over what direction

a rebuilt Germany would take, and in the west thoughts of a federal European union re-emerged, hoping

to bind Germany into pan-European democratic institutions to the extent that it, and any other allied

European nation, both wouldn’t be able to start a new war, and would resist the expansion of the

communist east.As of the end of 2009, there are twenty-seven countries in the European Union.

Dates of Joining:

1957: Belgium, France, West Germany, Italy, Luxembourg, Netherlands

1973: Denmark, Ireland, United Kingdom

1981: Greece

1986: Portugal, Spain

1995: Austria, Finland and Sweden

2004: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic,

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Slovenia.

2007: Bulgaria, Romania

Types of European Law

There are four main types of European law they are treaties, directives, regulations and decisions. A treaty

is a primary source of law (the most important treaty being the Treaty of Rome). Treaties are binding

agreements between all member states and individuals so far as they apply to them. In practice, the

treaties govern mainly the organization of the Community and the relationships between the Member

States, but some of them affect individuals directly. For example, Art.8 (1) of the Treaty on European

Union gives all European citizens the right to vote (and even stand for election) in any member state also

Art.141 establishes the principle of equal pay between men and women. An individual citizen can under

certain circumstances rely on the provisions of the treaties when taking legal action against a government

or another individual. There are many examples of cases that have involved this. For example, Clean Car

Auto service v Wien [1998]. A company set up a branch in Austria and appointed a German manager;

Austrian domestic law required such managers to be resident in Austria. The Court said this rule

amounted to indirect discrimination violating Art.39 of the Treaty, which guarantees the free movement

of workers, and could be relied upon by an employer just as by an employee. Another example would be

Diocese of Hallam v Connaughton [1996].A woman resigned as Diocesan Director of Music (having been

the first holder of that post), and a man was appointed to succeed her at almost twice the salary. She

brought a claim for sex discrimination under Art.119 of the EC Treaty. In preliminary proceedings,

remitting the case to the Industrial Tribunal for a hearing, judge Holland J said it was established that

comparison could be made with a predecessor. 

Regulations made by the Council (with the consent of the Parliament) or the Commission (within its

delegated powers) have general application. They are binding in their entirety and are directly applicable

in all Member States. Regulations can deal with matters of minor detail or with fundamental issues.

Council Regulation 1612/68, for example, sets out principles for promoting the free movement of workers

(including students) by abolishing discrimination with regards to employment, trade union rights,

housing, social and tax benefits, and access to training.

There are four main types of European law:

The Treaties

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The Directives

Regulations

Decisions.

The final court of appeal for any matter involving European law is the Court of Justice.

The Treaties

The Treaties are often used together to form a type of constitution for the European Union.

Many of the rules governing European law are found in the EC Treaty (the name for the Treaty of Rome

since 1993).

Directives

The European Union has the right to issue directives under Article 249 (ex 189) of the EC Treaty.

[The term ex 189 means that this was the Article’s number under the original Treaty of Rome.]

A directive must not break a Treaty. If a directive is against a Treaty then the Court of Justice can

annul it.

Regulations

These are laws made by the European Union under Article 249 (ex 189) of the EC Treaty.

Regulations automatically apply in each member state and do not require a member state to pass

their own laws to introduce them.

A regulation must not break a Treaty. If a regulation is against a Treaty then the Court of Justice

can annul it.

Decisions

These are issued under Article 249 (ex 189) of the EC Treaty by the different institutions (such as

the Commission, etc.).

No institution can issue a decision unless it has been given the power to do so under a Treaty

(usually the EC Treaty).

Decisions are addressed to specific people or organisations or member states and have the force

of law.

They automatically apply and do not require a member state to pass their own laws to introduce

them.

A decision must not break a Treaty. If a decision is against a Treaty then the Court of Justice can annul it.

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Recommendations and Opinions

Article 249 of the EC Treaty also gives the institutions the power to make opinions and

recommendations.

They do not have the power of law although they can be very persuasive particularly if they come

from the Court of Justice.

“What are the advantages and disadvantages of being a member of EU”?

A variety of articles written on European Union and its membership have concentrated on the advantages

and disadvantages that the EU provides to its member states .Most of them which were written on the

advantages of EU membership claim that: the European Single Market which enables companies to trade

in an international market, a Monetary Union, environment protection and war prevention as the main

advantages .However, there are also some disadvantages to be considered. The disadvantages that are

usually mentioned are the loss of national sovereignty and little influence that small state s have.To begin

with, the European Single Market is the first advantage of being a member of EU. According to

Europa (2009) the EU member states have formed a single market with more than 500 million

people .This enable companies to trade in the international market. In addition he mentions that without

this platform, competing individually and Making products and services in the EU states would be more

expensive and difficult. Derhan(2010) in his article,

“European Union: Risk - Benefit Analysis”, says that both EU citizens and

businesses have the benefits of the single market. According to him, 2.15% of the Gross Domestic

Product (GDP) comes from the money that citizens get from the single market which was approximately

708 EUROS per person in 2006. In addition to this, the single market has contributed to reduce

the number of unemployed. According to CEC (2008) as a result of the Lisbon Strategy, more than six

million jobs were created in the last decade and the European industry has contributed a lot to increase the

number of jobs within European Member States. Another advantage of European Union membership is a

monetary union. Monnet (2005) claims that a unique currency makes the trade easier because any

alteration in the prices is noticeable. Furthermore, he mentions that the buying and the selling prices are

equal in different countries which shows transparence and makes a single market in Europe. What is

more, a monetary union brings many facilities. According to Ilskovitz, Dierx and Sousa (2007) a single

currency facilitates not only customers but also businessmen in their transitions costs as there is no need

to use different currencies. In addition they mention that with the introduction of a new currency (EURO),

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EU member states have the same prices and this make the trade between them easier. By eliminating the

national currencies, EU member states have been forced to reduce the prices of their products so that they

can stay at the same level. Another advantage of European Union membership is the environmental

protection and war prevention. The health of the environmental is important for human being so it is

important to preserve it. Derhan (2010) states that the EU has created policies with a purpose to protect

the environment. Apart from this, EU has created policies to prevent people

from turning to terrorism. Council of the European Union (2008) states that these policies are

concentrated on the radiation of the terrorist group like Al Qaeda and the groups that it inspires. The

treaty of Lisbon (2007) also states that the EU’s priority is to ensure the safety and security of its

members. As a result, EU has been working with the regions that are across its borders like the Balkans,

North Africa, the Caucasus and the Middle East, all together with its allies. The European Single Market,

monetary union, environmental protection and war prevention are the main advantages of being a member

of EU; however, there are some disadvantages as well. The first disadvantage is the loss of national

sovereignty. According to Derhan (2010) when new members join the EU, they agree to obey all the

regulations even if it is against their national rules and by signing or joining they put away some of their

nationals over eignty. Moreover, Curia (2010) also states that when the member states are found in fault,

the European Court of Justice (ECJ) ask them to take care of the situation in control. The members pay a

penalty if they fail to fix or take the situation in control. Derhan in his article claims that “the legal system

provides the most evidence of national sovereignty being eroded at the national level and replaced by

control. The ECJ is the enforcer of EU law”

That is, the national sovereignty is reduced gradually as the member states follow the EU law. Another

disadvantage of EU membership is little influence of small states. Denti (2007) says that “for what

concerns policy areas, it can be seen that the influence of small states has been weaker on security issues

(e.g. the case of the contact group for the Balkans, a directorate of the big states in the EU), while they

have proved to be path finders on the other fields”. In other words, it can be understood that the small

states have less participation on security issues. In addition to this, Derhan (2010) claims that larger

member like France and Germany have more geo-political influence than small states, i.e., small states

have less of voice. Furthermore, they are overruling because of their size without respect their citizen’s

concerns. From what have already been written above, it could be concluded that the European Union

membership has many advantages such as the European Single Market, which enable companies to trade

in an international market, a monetary union, environment protection and war prevention. On the other

hand, of course, there are some disadvantages like the loss of national sovereignty and little influence that

small states have. It is obvious that the EU is a big organization and there is an obvious appeal for many

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European States to join the EU, however, joining EU is a very controversial subject. Turkey has been

trying for EU membership since the 1950s and now Turkey’s relations with the EU entered a new era

with the start of accession negotiations. European Union should accept Turkish membership taking

account of its remarkable progress in economy and Turkish’s strategic localization.

 Those opposed to Turkish membership in the European Union point out several issue. First, they claim

that Turkey is large in terms of population and small in economic size. Hughes (2004) claims that Turkey

is a country with a huge population and very small in economic terms with political and economic

implications. He further states that in economic terms, Turkey will have a small impact on the European

Union Market. Hughes might have a point; however, the reality is very different from what he states.

Turkey’s population is not

adults now, most of them are children. This means that they will contribute to the progress of Turkish

economy in the near future. What is more, Turkey’s economy has been growing significantly if we

compare with some other countries which are already members of European Union. Domaniç (2007)

claims that 20% of the Turkish population is children now but as some studies show, by 2020 they will

reach their working age and will contribute to the

development of the country. Furthermore, he states that Turkish economy has been growing at any

significant rate and this has contributed to the stability of the macro-economy as well. As a result of this,

not only the inflation but also the public sector deficit and debt have reduced. Second, those opposed to

Turkish membership to the EU claim that there is not a good relation between Turkey and its neighbors

and EU security will be in danger. Gasparini (2007) claims that Turkish accession to the EU will bring

negative impacts as it will increase the area and the border of the EU touching areas with a lot of  conflicts

such as Caucas us and the Middle East. Apart from this, he further states that Turkey has been involved in

conflicts with its neighbors so they need to resolve and take control of it in order to maintain its border

safe. Gasparini may have a point, but Turkey has solved most of the problems with its neighbors, in fact,

Turkey has now a good relationship with countries like Greece and Armenia that used to be enemy.

Ünluhisarciklı (2010) claims that although

Turkey has some unsolved problems with its neighbors; Turkey has given an important step to resolve

those conflicts. Turkey improved their relation with Greece, they are no longer adversaries. Apart from

this, Turkey and Armenia have established a diplomatic relation. He further states that Turkey has a new

foreign policy and with this policy, Turkey will better improve the relationship with its neighborhood and

will play the role of mediator in regional conflicts contributing to the peace and stability between them. In

security terms, Turkey has already a good experience in this area. Domaniç (2007) claim that in 1952,

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Turkey joined NATO and since then Turkey has been contributing to the European Security and Defense

Policy (ESDP) so EU can take this advantage and Turkey’s strategic localization to stabilize the highly

volatile regions. The Opponents also mention the Cyprus problem. Gasparini(2007) claims that the

Cyprus problem is a big issue and has serious implications for the negotiations between the EU and

Turkey, the possibility of any integration is out of question if the Cyprus question is not answered. Yet,

this idea cannot be more than just a claim, because Turkey actually voted for the reunification and it was

the Greek Cypriots who did not accept it. ABHaber (2008) claims that the current situation between these

countries is the result of EU’s faulty strategy when they accept Southern Cyprus as a member

representing the whole of the is land. In addition to this, Hannay (2006) states that Greek Cypriots voted

against by rejecting the reunification of the island in April 2004, in fact it was the Turkish Cypriots who

voted in favor. The last claim of those opposed to Turkish membership in the EU is that Turkish culture

and value are different. Rosenberg (2008) claims that Muslim and Christian culture are not alike. He

further states that Turkish population is 99% Muslim and the Europe population is based in Christianity.

However, he might get it wrong because the integration of Turkey in the EU not only will strengthen the

dialogue between Christian and Muslim but also bring democracy between them, That is, their  integration

would enrich religious freedoms in the EU. Domaniç (2007) says that Turkey will contribute positively to

the unification and the intercultural dialogue between the Christian and the Muslim population. More

over, it would strengthen Turkish Democracy and shows that Islam and democracy can co exist. The

number of Muslim living within the borders of EU has been increasing daily so it is safe to say that Islam

is already a part of the European Culture. The integration of Turkey would show that Muslim culture is

accepted in the EU. In addition to this, İnaç (2003) claims that Turkish’s accession to the EU will enrich

religious freedoms bringing Muslim and Christian together. All in all, the proponents of Turkish

accession to the European Union should rethink their points and claims, taking account of Turkish

remarkable progress in economy and Turkish strategic localization, without any biased and subjective

thoughts. On the other hand, Turkish authority should convince the opponents of their integration to the

EU that their integration to the EU will provide valuable benefits to the organization. Once they do this,

the opponents will understand the importance of the Turkish membership in the EU and start to support

their integration to the organization

Objectives of the EU

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The Union’s objectives can be read in the Lisbon Treaty Art. 3 TEU and include, among others:

the promotion of peace and the well-being of the Union´ s citizens

an area of freedom, security and justice without internal frontiers

sustainable development based on balanced economic growth and social justice

a social market economy - highly competitive and aiming at full employment and social progress

a free single market

The Union shall also combat social exclusion and discrimination and promote social justice and

protection, equality between women and men, solidarity between generations and the protection

of children s' rights.

The European Union also establishes a set of values in Article 2 TEU. The EU Court can take

values and aims into account when it decides on case law.

Values of the European Union

list of the Union's values. The Union shall respect human dignity, liberty, democracy, equality,

the rule of law and human rights.

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CHAPTER – III

Overview of the European Union at work and its major

achievements

For many years, the EU institutions have been thought of as a huge bureaucracy far removed

from citizens’ daily lives and concerns. Yet the EU deals with issues which are critical for all

Europeans. 

Examples include efforts to develop liberty, prosperity, education, peace, security, justice, the

protection of the environment and health, thereby helping to disseminate basic human values at

the global level.

The euro: the most visible and concrete expression of the European project Euro notes and

coins have, quite successfully, been in circulation since 1 January 2002. The single currency

creates a sentiment of involvement among citizens by giving them a visible, concrete example of

the European project at work. An added benefit is a stable economic climate which encourages

trade and growth, as well increased competitiveness for EU products and service. There are 16

Member States in the euro zone: Austria, Belgium, Cyprus, Finland, France, Germany, Greece,

Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovania and Spain. To

date, the other EU Member States have not yet adopted the single European currency.

Specific result:

With the euro, the single currency with the symbol "€”, it has become easier to travel in Europe and

compare prices without having to deal with the uncertainties of daily foreign exchange rates. 

A free area

One of the EU’s greatest success stories was rounded off in 1993 with the full entry into force of

the internal market (free movement of people, goods, services and capital).

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Specific results:

People, goods, services, capital and, to a great extent, services, can move freely within the

European Union as if they were in the same country. 

Individuals can travel across most borders without any formality and it has become much easier

to work, holiday or study in another EU Member State. 

Citizens all have a similar EU passport. 

Consumers have access to a greater range of goods and service and comparing prices is easier

since the introduction of the euro.

Peace and stability in Europe and throughout the world

Having learned the lessons from the armed conflicts of the early 20th century (the first and

second World Wars) and more recent hostilities (in ex-Yugoslavia and Kosovo) which took

place on its soil, Europe has taken a resolute stance to promote peace and stability both within its

own borders and at the global level. 

This is first and foremost achieved by promoting human rights, democracy and active diplomacy

focussing on conflict prevention, and the reason why the EU has developed a Common Foreign

and Security Policy (CFSP). 

Similarly, the EU also aims to build a genuine common European Security and Defence Policy

(ESDP) to protect EU territory and carry out peacekeeping missions.

Specific result:

Since 2003, the EU is capable of deploying a European combat force of about 60,000 troops. This combat

force can act either independently or in conjunction with NATO units. This has enabled the EU to launch

civilian and military crisis management operations in the Balkans (Former Yugoslav Republic of

Macedonia and Bosnia-Herzegovina), Africa (Democratic Republic of the Congo) and Afghanistan.

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A unique area of freedom, security and justice

One of the EU’s priorities (which has been given added weight in the European Constitution) is

to guarantee Europeans a unique area of freedom, security and justice. All too often, the

authority of police services and courts is limited to their national territory while crime and

terrorism do not stop at a country’s borders.

For this reason, the European Union decided to take a series of common measures to effectively

combat these scourges in all Member States. These measures include more effective protection

of basic individual rights, promoting initiatives in the field of European citizenship and a

common policy for managing migration flows, developing a common European asylum policy

and judicial cooperation in civil matters, promoting a coherent prosecution policy and

intensifying the fight against terrorism.

Specific results: 

With regard to crime, national police forces are working more closely together, notably through

Europol. Databases make it possible to gather, analyse and share information on criminal activities.

With regard to terrorism, the attacks of 11 September 2001 in the United States prompted the Members

States to pass laws ensuring a certain level of consistency in the definition of acts of terrorism and for

sentencing measures.

With regard to justice, citizens must be able to call on the courts and authorities of all Members States

as easily as they would in their own country. For example, rulings and decisions must be complied with

and implemented in all EU countries, the goal being greater compatibility and convergence among the

various Member States’ legal systems.

A common commercial policy

The common commercial policy, which is based on the Member States’ Customs Union,

includes common arrangements for imports as well as a common external tariff uniformly

applied to all Member States.

The policy’s objective is to contribute to the harmonious development of world trade and the

reduction of customs barriers. It has been clearly shown that free trade based on fair rules is

beneficial to stability and development not only for the EU, but also far beyond its borders.

18

Through the common commercial policy, EU countries take part in trade negotiations as a single

group and thereby further promote Europe’s image throughout the world.

Efforts are also made to bear in mind the poorest countries when developing the EU’s common

commercial policy, although they often accuse it of refusing to let in more of their exports,

particularly agricultural products. Nevertheless, in its Generalised System of Preferences (GSP)

the EU grants duty-free access or preferential access at a reduced rate to its market for certain

imports from developing countries or economies in transition. Exports from the world’s 49

poorest countries (with the exception of weapons) have also been granted duty-free access to the

European market.

Specific result: 

Products entering the EU are charged the same duties regardless of whether they are imported, for

example, via the port of Antwerp or via the port of Athens.

A common agricultural policy

The European Union set up the Common Agricultural Policy (CAP) to increase agricultural

productivity, provide for an adequate standard of living for agricultural workers, stabilise

markets, guarantee security of supply and ensure reasonable prices for consumers. While

maintaining these initial objectives, the most recent CAP reforms also take account of growing

societal concerns regarding food safety and quality, environmental protection issues and animal

welfare.

Specific result:

From now on, payments of direct aid to farmers will be contingent on compliance with food safety,

environmental and animal health and welfare standards, in addition to the application of good agricultural

practices. Through its rural development programmes, the CAP also makes an essential contribution to

boosting the competitiveness of agriculture, improving the rural environment and spaces and diversifying

economic activities in rural areas. Compliance with European legislation stemming from the common

19

agricultural policy is the responsibility of various verification bodies at both the federal and regional

level.

Social Europe and the cohesion policy

Social considerations continue to play an important role in the European project. Through its

Directives, the EU aims to arrive at a convergence between the laws of Member States in fields

such as employment, social protection and working conditions to develop a common, basic set of

rules at the European level.

To do this, the EU has developed measures to encourage convergence and advocates

coordination methods between Members States.

With regard to employment and growth, the EU actively tries to involve the social partners in

order to ensure that the interests of all parties are adequately represented.

Lastly, solidarity in Europe is also the cohesion policy, which aims to gradually work away

development shortcomings or stimulate conversions in certain regions of the EU.

Specific results:

the free movement of workers and the coordination of social security systems: all EU nationals are

entitled to work, without any discrimination, in another Members State and to benefit from its social

insurance system;

gender equality: five Directives have been issued since 1975 to guarantee equal treatment at work, the

same salary for the same job and access to social security cover; 

labour law: protection of individual and collective rights and a guarantee of safety and security in the

workplace; 

the fight against various forms of discrimination; 

Several Belgian provinces have benefited from EU funds to support their development initiatives or to

assist in their economic conversion (specifically Hainaut, Liege, Limburg and Antwerp). 

Protecting health and the environment

Taking care of the environment to safeguard quality of life for current and future generations is

one of the EU’s main priorities, and it has embarked on the ambitious project to combine

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environmental protection and economic growth. The main priorities are as follows: preventing

climate change and fighting global warming, protecting nature areas and the wild flora and

fauna, dealing with health and environmental problems and finding better waste management

solutions.

Clearly, very many environmental problems go far beyond the EU’s borders and this is why it

has signed international programmes and conventions tackling problems such as acid rain,

biodiversity, climate change and greenhouse gases.

Specific results:

The Ecolabel scheme helps European consumers make more eco-friendly choices when selecting

products or services;

The European Environment Agency monitors the state of the environment and issues alerts when

problems are detected. This in turn makes it possible for the EU to take the necessary legislative

measures;

The well-known Kyoto protocol (greenhouse gas reduction) was in part initiated by the EU, which

remains one its most fervent proponents, and it symbolises the beginning of global awareness of the risk

of climate change;

In the 1990s, the EU decided to require catalytic converters on all vehicles and to     stop adding lead to

petrol.

A knowledge-based society

The European Union has set itself the objective of becoming the most competitive and dynamic

knowledge-based society in the world. As a result, education, professional training and support

for young people have become three major priority areas.

Every year, thousands of European citizens benefit from cross-border education or training

programmes which foster intercultural understanding and make it possible to live, study,

specialise and work in other European countries.

Educational qualifications are accredited in other EU countries and citizens’ access to training,

whether in their own country or another Member State, is made easier through partnerships,

exchange programmes and the elimination of numerous administrative hurdles.

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Specific results:

Below are a few examples of education and training programmes included in the broad range of

options offered by the EU:

Socrates, an education programme which includes Erasmus, the oldest and probably best-known cross-

border education programme financed by the EU. Each year, Erasmus provides grants to students and

teachers which enable them to attend universities in other Member States to follow or teach courses.

Leonardo da Vinci promotes international exchanges and cross-border projects in the field of vocational

training and education.

Europass-training makes it possible to establish a record of achievement for the education received or

the time spent training in another country.

Gruntvig is designed for adult students and their teachers. 

Comenius is specifically reserved for schools and teachers.

Lingua promotes language learning.

Minerva covers the use of new technologies in education.

Trade Policy in the EU

The EU is the world's largest trading bloc. Together, the 27 EU Member States account for 19

per cent of the world’s imports and exports. The EU Member States negotiate collectively and

are represented by the EU Trade commissioner, Karel de Gucht.

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Free Trade Agreemet between india

Negotiations between the EU and India on a free trade agreement were launched in June 2007.

The negotiations are part of the EU’s strategy of signing free trade agreements with the EU’s

largest trading partners to secure EU external competitiveness, and hereby contribute to

increased growth and employment. 

Among the Members States there seems to be general agreement on the overall advantages and

importance of the agreement in regard to the EU’s strategic partnership with India. The European

Parliament has expressed special interest in particularly the political aspects of a future

agreement, which according to the EU is to include sustainable development and political clauses

on human rights among other things.

Review of the GSP Regulation

In May 2011, Commissioner for Trade Karel De Gucht submitted a proposal for a review of the

GSP (Generalised System of Preferences) regulation regarding a new scheme for developing

countries on market access. The proposal consists of a major differentiation amongst developing

countries, which is a result of the rapid economic growth in and competition from a number of

developing countries.

In general the Council has received the proposal positively, although some Members States have

requested that the GSP regulation should be more development-friendly, whilst others prefer that

the GSP regulation should be less comprehensive.

The Danish EU Presidency will make an extraordinary effort to conclude the negotiations on a

new GSP regulation. Furthermore, it is important to strengthen the GSP regulation as a political

tool in trade regulation for the purpose of promoting the integration of developing countries in

the international trade system and contributing to growth and employment in the respective

countries.

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CHAPTER – IV

FUTURE PROSPECTUS OF EUROPEAN UNION

As it is clear the integration is not in the high level as it anticipated by the founders of the Community. Although the states of the European Union (EU) have achieved to reach a supranational level of integration in economic issues, some policy areas such as common foreign and security policy are in the intergovernmental level. At the same time, the policies involving heavy government expenditure likely education, health, social welfare are applied in the national level.

These are the main questions that concern the policymakers of the Union. There is need for the consolidation of the integration in the EU. For the consolidation of the integration the Union has defined several purposes that together are summed up as the future prospects of the EU. Future prospects of the EU are consolidating of the euro, managing flexibility and enlargement which are considered crucial points for the future development of the integration in EU (Sine qua non).

 As mentioned above, one of the future prospects is consolidating the euro which will enhance economical integration among the European nations. The coming of the euro has been very beneficial for the economy of the EU. However, the euro can not be understood fully successful due to the some problems within economy. One of the challenging problems is that growth rates inside euro zone is low, and at the same time the unemployment rates have increased dramatically in the recent years. The root of the euro system, the Stability and Growth Pact that constructed to accommodate the needs of member states was ineffective in enhancing the further development of the euro system because of its limited functions. So, the ability of the euro in improving the economic integration is not proven yet. Specially, the enlargement of 2004 showed that there were so many financial controversies within the euro system. Accordingly, the Union needs to consolidate the euro in order accelerate the integration process among the European nations. The efforts of the EU for the solidification of the euro was demonstrated the entrance of Estonia to the euro currency system. Meanwhile, the EU is also attempting very strongly to increase the competitiveness of the euro in the world market.

 Another prospective area is the strengthening the common foreign and security policy that was stimulated by tensions and upheavals in the Balkans and pressures from the USA. The development of the terrorism in the twenty first century enforced the EU to pay high attention to its external security. The most crucial prospect related to security policy is the creation of the common energy security policy in the future. As it is certain, the EU does not possess common energy policy. As a result of this, each state follows its own energy policy that affects negatively to the integration process and. Especially some European states have been dependent on Russia energy supply leading to further tensions among the European states and Russia. At the same time, the lack of the common energy policy prevents the construction of the Nabucco gas pipeline that was intended to reduce gas dependency of the Union from the Russia. That is why there is need for launching of the common energy policy.

 

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The other future prospect of the Union is managing flexibility that is limited in the current times. As a result of compexity, new forms of the governance have developed in the Union that has several dimensions. These dimensions cover the administrative system and public policies placing less stress on the traditional forms. Specially, flexibility is important when the new states enter to the Union. The Union needs to manage flexibility and accommodate to the new members. In several times, the political and economical situation of the entering states become different from the Union’s that enforce the Union to manage flexible policies. So for the development of the integration, the management of the flexibility is essential. In addition, the emergence of the financial crises in Greece and later on in Ireland showed the vulnerability of the Union to crises prevention and management which intensified the debate over the issue.

 The last but not least future prospect of the Union is enlargement that is controversial issue. There is tendency for the membership which is that in some cases, states firstly become the member of the NATO, later access to the EU. There are several candidate states for next enlargement. These states are Turkey, Croatia and so forth which have faced so many obstacles on the way of accession to the Union. However, there is belief that the enlargement of the union will bring a sustainable place for the people for living. Enlargement is aimed to create the “State of the Peoples” that would be beneficial for the people rather that national states. As a result of the enlargement, the travel to other states will become easy and economy will increase as a coming of the new market for the goods. In order to strengthening the relations with its neighbors the Union prepared new policy, called New Neighborhood Policy covering several programs such as Euro Mediterranean Partnership, Eastern Partnership and so forth including the neighbors of the Union along its map. 

To sum up the future prospects, consolidation of the euro for the increase of euro zone, policy development and reform aiming to reach supranational level in all policies, managing flexibility for get along with newcomer states and enlargement that was intended to increase the opportunities for the people of the Union are demanding in order to create a healthy community and society within the European Union.

Barriers to trade within the European Union

Tariffs on trade within the European Union were abolished decades ago. But research by Natalie

Chen and Dennis Novy finds that significant trade barriers remain, notably "technical barriers to

trade," such as health and safety requirements as well as packaging and labelling requirements.

European economic integration was launched in the 1960s with the creation of customs unions,

abolishing internal tariffs and trade quotas. The process was revived within the European Union

(EU) by the Single European Act of 1986, which aimed to complete a Single European Market

by the end of 1992.

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More recently, the introduction of the single European currency – the euro – was intended to

accelerate the process of trade integration by eliminating exchange rate uncertainty and

increasing transparency and competition across markets.

The single market was motivated by the observation that in the 1980s, trade within Europe was

still impeded by significant barriers to trade. In particular, there remained many non-tariff

barriers, including so-called "technical barriers to trade."

The costs of technical barriers to trade eclipse the costs associated with being outside the euro

area These barriers result from regulations that affect the sale of goods in some markets by

requiring specific product characteristics or production processes, for example, a certain package

size for food products.

With intra-EU tariff barriers having been completely eliminated by 1968, technical barriers have

become increasingly visible. They are also a key concern in today's global trade negotiations,

with the World Trade Organisation (WTO) seeking to ensure that (from the WTO Agreement on

Technical Barriers to Trade)

So how much progress has the EU made in removing internal barriers to trade? Our research

measures trade integration within the EU by examining 166 manufacturing industries in 11

member states over the period 1999-2003. We find that significant trade barriers remain and,

apart from the inevitable transport costs, the most substantial costs are technical barriers.

Indeed, the costs of these barriers eclipse the costs associated with being outside the euro area.

They also eclipse the costs of not abolishing physical border controls – between continental

Europe and the UK – by opting out of the Schengen Agreement.

Policy action could lead to further gains from the reduction of trade barriers within Europe In

quantitative terms, we find that the costs associated with geography and transport explain 25% of

the variation in trade integration. The most important factor is the weight to value of traded

goods (17%), followed by the distance between the origin and destination of shipments (5%).

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Policy factors explain 7% of the variation in trade integration, which is far from negligible.

Technical barriers to trade are the most important factor (5%), while public procurement,

Schengen and the euro only play very minor roles.

The policy implications of these results are clear. While the barriers related to geography and

transport costs arise from the very nature of spatial separation between markets, policy barriers

such as technical barriers to trade are in principle removable. This suggests that there is room left

for policy action and that further gains are possible through the reduction of trade barriers in

Europe.

OVERVIEW

This curriculum deals with two crucial, ongoing events in current affairs: the enlargement of

both the European Union and NATO. As the EU and NATO grow, they face an array of political,

social, and economic challenges that could reshape the world we live in. For that reason, this is

an important topic for American students to study. One of the objectives of this unit is to inform

students about Europe and its increasing economic, cultural, and political importance in an

interdependent and interconnected world.

Current EU Issues

Recent stories on the EU covered on this site include:

1)Unemployment up 1.8m in EU in past year. Now at 10% of labor force

2)Ireland's total tax-take is among the lowest in the EU

3)Belgian Presidency of EU will be challenging on social agenda

4)EU Commissioner raises concerns about emergency plans as social programmers take

the brunt of cutbacks

5)EU heads of government produce lop-sided strategy and fudge poverty target

6)Ignoring poverty could lead to serious problems according to EU Commissioner

European Parliament passes resolution on taxing speculative financial transactions

8 Irish MEPs attend launch of Zero Poverty Campaign in Brussels

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Arguments for the European Union

The EU represents one of the greatest experiments in political history. For the first time

nations have chosen to surrender aspects of their national sovereignty to a central body that

has a responsibility to ensure that they act for the good not only of themselves but of other

nations as well.  Those who support the concept of the EU are called pro-Europeans or

Europhiles.  They base a lot of their arguments on the themes outlined below.  These are

opinions - you should decide if you agree with them or not.

The EU safeguards peace

The European Community was established to ensure that the great European powers that had

been at war for hundreds of years would never again enter into armed conflict with each

other.  By creating a European Coal and Steel Community (ECSC) the intention was to

make France, Germany, the Netherlands, Belgium, Luxembourg and Italy co-operate by

forcing them to share their coal and steel resources in the rebuilding of Western Europe after

World War II. This rapidly evolved into a wider European Community and eventually the

European Union. When the Berlin Wall came down in 1989 there were predictions that the

former communist states in Eastern Europe would degenerate into civil war. Instead, thanks to

the efforts of the EU, within fifteen years nearly all of those nations had become democratic

and been welcomed into the EU.It is now inconceivable that a major European war will occur,

something that people could not have imagined at the end of either World War II or the Cold

War. This has been achieved because European nations are now locked into reliance on each

other, with shared laws, shared political leadership from Brussels, shared economic

policies and even shareddefense. The EU provides the first example of a truly supranational

body where the ambitions of nations are curbed by a need to co-operate in order to

succeed.  This body has helped to bring incredible political stability to Europe and to remove

the chance of a repeat of World War II within its boundaries.

The EU gives states more power on the global stage

EU membership gives states increased influence on the global stage. While nations would find

it easy to ignore Britain or any European nation acting on its own, the combined influence of

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all twenty-seven member states acting together is harder to ignore. As other nations begin to

club together in multi-national bodies, such as the Association of South-East Asian Nations

(ASEAN) or the African Union, it will become more and more difficult for individual

European nations to make their voices heard without the support of the EU as a whole.

One major example of this is in the World Trade Organization (WTO) talks, where

global trading rules and standards, including tariffs, are set and monitored. When the EU

negotiates on behalf of its members in this organization, it represents the world's biggest single

market and as a result has more influence.  Other nations are much keener to make

concessions to the EU than to individual member states as they see the rewards of gaining

access to the EU market as much greater than the rewards of gaining access to any individual

national market.

The EU makes us better off

A principle aim of the European Community has been to enable the rebuilding of the European

economy after the disasters of the Great Depression and World War II. By creating a customs

union and later the single it has been hugely successful at doing this. Since January 1993, the

Commission estimates that the single market created 2.5 million jobs and €877 billion of extra

prosperity, thereby upholding the principle of an open liberal market economy in Europe and

making everyone wealthier.

The EU encourages our neighbors’ to reform

The EU shares land or sea borders with a great variety of nations including Egypt, Libya,

Serbia, Turkey, Syria and Israel, with unstable governments, histories of conflict or different

cultural and political outlooks to our own.  Despite this, the EU's European Neighborhood

Policy (ENP) ensures stability with the region by offering favorable relations with the EU in

exchange for nations living up to standards such as the rule of law and democracy. Meanwhile,

nations that look to join the EU are encouraged to reform their national institutions in order to

fit in with the European liberal democratic model.  This encourages wider stability and

improves people's lives

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CHAPTER – V

CONCLUSION

The EU will survive and will not break up any time soon, no matter the economic, social, political, and foreign policy challenges. The next crisis in the capitalist economy will force governments to make even greater concessions to banks and corporations at the expense of the slashing living standards from the middle class and workers. This will necessarily entail greater division within EU and greater popular opposition to its continued existence, for it will cease to serve the majority of the people and only cater to the financial elites. It will take several crisis of capitalism for the EU to collapse and not one deep recession and one left-centrist reformist regime in Athens opposing austerity, neo-liberalism and the patron-client integration model. After all, there are many countries waiting anxiously to join the EU, despite the fact that it has sharply deviated from its original mission and its interdependent integration model intended to help the economically weaker members.

It took many decades for political leaders to convince their citizens that EU membership was good for everyone and not just for banks and multinational corporations based mostly in northwest Europe. It has taken a relatively shorter time for people to judge for themselves the degree to which the EU best serves the interests of all people in all the member states and not just the core. The prevailing skepticism of whether there are really any benefits to the national economy and society as an EU member, or if membership really serves the domestic financial and political elites as well as the core EU members, especially Germany, is an issue that cannot be overcome with propaganda, but rather substantive policies resulting in real changes across Europe.

Such changes will not come because the powerful banks, insurance, pharmaceutical, defense, and other multinationals are behind the regimes of Europe and they resist any change in the patron-client integration model, and in making a commitment to social justice by strengthening the middle class and workers that have suffered high unemployment and major cuts in living standards. Along with some programs designed to reduce unemployment by strengthening businesses and providing even greater tax and other incentives to corporations to hire and keep workers, there will be a major propaganda campaign for voters to support the EU. Without tangible results in socioeconomic improvement, the result will be continued rise in the right wing and left wing political parties and disparate groups that want their countries to leave the EU or they demand a different integration model.

The contradiction of the EU is that it is trying to project itself as the most desirable bloc with the strongest reserve currency on earth, as it tries to attract new members in Eastern Europe, while at the same time, it is chocking growth and development within the periphery areas precisely because it has a strong currency under monetarist policies and neoliberal course of privatization and corporate welfare programs undercutting the middle class as the popular base of a democratic society. Survival is indeed certain for the short term, but longer terms the decline and fall of the EU under the current integration model is inevitable.

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• The European Union is the strongest supranational organization in the world

– shared currency & financial management

– legislative, judicial, and executive bodies

– regulatory and planning bodies

• The EU is growing geographically, and its growth suggests a core-domain model

– core and domain are borne out by distribution of income

• The EU does not appeal to all Europeans (at least not yet)

– small states in particular seem skeptical

• Roughly comparable to the US in some ways

– population slightly larger than that of the US

– somewhat more densely settled than the US

– economy is at least as strong as the American economy

– Other social statistics (e.g. literacy, infant mortality & homicide) are as good as or better than the US.

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CHAPTER - VI

BIBLOGRAPHY

LOTS OF BOOKS AND WEBSITES ARE AVAILABLE FOR THIS PROJECT BUT THE

ABOVE MATERIAL OR INFORMATION ABOUT “EUROPEAN UNION” IS COLLECTED

FROM THE FOLLOWING SOURCES:-

1. INTERNET

‘General information on the EU, including enlargement

http://www.eurunion.org/infores/euguide/euguide.htm

http://europa.eu.int/comm/enlargement/intro/index_en.htm

http://europa.eu.int/comm/enlargement/enlargement.htm

2. ECONOMICS TEXTBOOK’S.

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