Learning IntentionUnderstanding trade

within the EU

The European Union • The European Union (EU) is a union of 27

countries and allows businesses in any of these countries to sell their products or services without restrictions to its 494 million citizens. This is called the single market.

• Seventeen countries have adopted a single European currency called the euro.

• Citizens of the EU member states are also EU citizens: they can invest, live, travel, and work in other member states (with some temporary restrictions on new member states).

Advantages of being a business within the European Union

• No restrictions (quotas) on the quantity of goods which can be sold to other EU countries

• No custom duties or tariffs are added to the price of these goods

• Free movement of workers and capital (finance) between member countries

• Larger choice of suppliers• Increase in competition should increase efficiency• Restrictive practices are stopped to allow all EU

companies to compete on a “level playing field” e.g. no subsidise to shipyards

• Increase in market, number of customers, sales and therefore profits

• Economies of scale

Disadvantages of trading within the European Union

• Language barriers and cultural difficulties • Distance problems – cost of transporting

products across the English Channel• Exchange rate difficulties (whilst UK

does not adopt the Euro)• Increased competition• Different trading laws e.g. minimum

wage

Financial support (Structural Funds) to EU based businesses

• EU can provide financial support to companies of these 27 member states. This usually to help reduce unemployment and regenerate deprived areas

1. European Regional Development Fund

• ERDF main objective is to promote regional development by giving financial support towards

• Creating and safeguarding sustainable jobs in most deprived areas

• Investment in the infrastructure of these areas – transport, telecommunications and energy

• Supporting schemes which help small and medium-sized enterprises (SMEs)

2. European Social Fund

• to financially support projects which improve training and job prospects for EU citizens

3. European Agricultural Guidance and Guarantee Fund

• to support job creation in traditional farming areas of the EU

Class Questions

1. What is the Euro? (1 mark)

2. Describe two advantages of trading in the EU? (2 marks)

3. What problem might be encountered when trading in the EU? (2 marks)