The European Union is probably the most successful multi-national organization ever created. It started out as an organization designed primarily to reduce or eliminate tariffs. It is now evolving into a government that is bringing the nations of Europe closer together politically, economically and socially.
The impetus behind the creation of the EU was similar to that which propelled the United Nations. Europe suffered terribly during the Second World War. France and Germany which wreaked horrendous damage on each other twice in the Twentieth Century and several times in the Nineteenth Century, decided that they must do something to reduce the possibilities of a future war, one that would threaten their very existence. A key reason these past wars had made some economic sense was that if Germany won it could take over vital French territory, especially the area of Alsace Lorraine, which contained large reserves of coal and iron ore and several steel-making complexes. If France won it could retain this territory and perhaps take over some German resources. The simple thought that started the movement towards integration was that if both countries, and their immediate neighbors, had open and equal access to the resources of coal and iron, then they would not need to fight each other to secure or protect them.
The European Union began as the European Steel and Coal Community in 1951. It established a common market for coal, iron and steel products within these countries. The experiment was so successful that the organization was expanded to include the European Atomic Energy Commission and The European Economic Community by the signing of the Treaty of Rome in 1957. These three Communities have now merged and one name is used to describe all three and the countries that have joined. This name is The European Union (the name was changed from the European Community in January of 1994.) The original signatories were France, Germany, Italy, Belgium, Luxembourg, and The Netherlands. The countries who have since joined are: The United Kingdom, Ireland, Denmark, Greece, and recently Spain and Portugal. In 1994 the Union accepted the applications of Norway, Sweden, Austria and Finland. The legislatures in all of these countries except Norway ratified the agreement, and, except for Norway, they are currently full members of the EU. In March, 1998, the fifteen member states of the European Union began bilateral negotiations with six applicant countries – Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia – on their terms of accession to the EU.
In the 1975 Lome` Convention a special economic relationship was established by the European Union with 46 African, Caribbean, and Pacific states. Most of these countries were ex-colonies of member countries of the Union.
Features of the European Union
1. The elimination of all tariffs, customs, quotas and other impediments to trade in goods and services amongst the various countries has now been largely accomplished. Goods now travel freely from country to country without border stops and without need for papers for every country. Many banks are now European. (Your MasterCard will be accepted almost anywhere.) A great deal of work had been accomplished in standardizing safety and environmental requirements for all products to ease trade. This was the first and most successful feature of the EU. It has increased competition within the 15 countries of the EU, bringing down prices, improving the quality of goods and services and providing a greater variety of products for European consumers.
2. A common tariff, customs, and commercial policy towards all third or foreign countries has been established. This has greatly facilitated trade with other countries. If Japan wants to sell automobiles in Europe, for example, it need meet only one set of requirements and it can ship to all countries of the EU. This has also greatly increased the bargaining power of the Union since it now represents around 390 million customers and thousands of businesses.
3. A common agricultural policy is in place; it establishes common subsidies and prices for most agricultural goods. Large surpluses have resulted, leading to numerous problems. Negotiations continue within the Union to reduce subsidies. The EU concluded negotiations with GATT, the precursor to the World Trade Organization, that will substantially lower tariffs in future years. About half of the budget of the Community goes to paying agricultural interests. The farmers of France and Germany have been the principal beneficiaries. Since these countries are so powerful it is difficult to change policies that probably make little economic sense.
4. There is free movement of people. This is perhaps the most remarkable achievement for the citizens of Europe. Germans can buy a house in Portugal and retire or vacation there. Workers in Ireland can seek jobs in Sweden or Denmark. By 1994 almost all people were able to move to any country they wished and perhaps within a year vote in local elections. There are few mandatory border stops between any of the countries. There is now a common European passport for all citizens in the EU. Airports and other points of entry to the EU will still require passports for people outside the Union.
Banks and other financial institutions are now merging and setting up subsidiaries in most of the fifteen member nations. Television and radio programs are now available in many languages throughout the EU. The Internet is not as popular in the Union (with the exception of the Nordic countries) as it is in the USA or Canada, but it is catching on quickly.
5. A rather complete monetary union is taking place, although at a slow and intermittent pace. This is called The European Monetary Union or EMU. In January of 1999 most of the countries in the EU started using a common currency, the "Euro", for credit card transactions. As of January 1, 2002, the currency in both paper and coin form was introduced (the domestic currencies are now almost all retired and the euro is now the principal money used in Europe. The United Kingdom, Denmark and Sweden have chosen to not join the Monetary Union at this time, but will honor the euro within their borders.
A common European Central Bank has been established to control the monetary system. This bank has powers similar to the US Federal Reserve. Perhaps most importantly it will control the money supply in the European Monetary Union (EMU).
6. The EU has a tax base. Unlike the United Nations, it does not have to beg for money--at least not as hard or as often as the UN. The Union's budget in 1999 was around 100 billion dollars. Not much when one compares it to the 1.7 trillion dollar budget of the USA in the same year, but substantially more than the seven billion or so that the UN had for general operations.
There are four principal taxes. The first tax the Union levies is a common customs and import tax on goods coming into the EU from non-member countries. Secondly, there is a special tariff charged on imports of agricultural products, and in particular sugar, originating from non-member countries. Third, is a value added tax (VAT), which is a sales tax added on at the wholesale or production level of goods in the EU. Finally, governments are assessed fees to bring the EU's budget up to about 1.25% of the total GDP of the countries in the Union.
7. A common development policy is now functioning, led by The Development Bank that is channeling money to lesser developed areas, especially in Portugal, Spain, Ireland and Greece. This bank is also investing in research in advanced technologies that will be necessary for Europe to compete in the word community.
The EU, primarily through German insistence, is also assisting Eastern Europe. In 1990 it established a bank with operating capital of 12 billion dollars to assist in the economic development of newly emerging market economies in Eastern Europe.
8.The European Union has established a government with executive, legislative, and judicial branches.
The most important governmental body is called the Council of The European Union. It determines all important policies. It has fifteen members, one for each country. Ministers are sent from each country depending upon the topic being discussed. For example, if the topic is foreign policy the foreign ministers make up the Council. In matters of great importance the chief executive officer of each country is present, for example the Prime Ministers of Italy and the UK, the Chancellor of Germany, the President of France. When the countries are represented by their chief executive officers the Council is called the Council of Europe.
The Council of The European Union now votes on most issues based on qualified majorities. Each country is allocated votes in rough proportion to its population. The current Secretary General of the Council is Javier Solana.
The European Commission is the executive body of the EU. It implements policies determined by the Council of the EU and the Council of Europe, in addition to policies determined by the European Parliament. It also has limited powers to create administrative policies. Each country is represented in the Commission and it often votes on specific policies. The president of the Commission is often called the President of the European Union. Currently the president is Romano Prodi, from Italy.
The European Parliament is a second legislative body. It has 518 members that are directly elected from the constituent countries. It has power to accept or disapprove of the budget prepared by the Commission. It also makes recommendations to the Commission.
The Court of Justice is composed of 16 members who serve for six-year terms. One is from each country; the judges themselves select the president of the court. The Court rules on all cases involving laws or regulations passed by the Union. It is becoming increasingly powerful since member nations have gone along with almost all of its rulings.
Major questions have come concerning the countries that have recently gained their freedom in Eastern Europe. Countries such as Poland, Hungary and the Czech Republic are the most likely new countries that will be admitted sometime soon after the year 2003.