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europeon union

  1. 1. EUROPEAN UNION EUROPEAN UNION Definition of 'European Union - EU' A group of European countries that participates in the world economy as one economic unit and operates under one official currency, the euro. The EU's goal is to create a barrier-free trade zone and to enhance economic wealth by creating more efficiency within its marketplace. Investopedia explains 'European Union - EU' The current formalized incarnation of the European Union was created in 1993 with 12 initial members. Since then, many additional countries have since joined. The EU has become one of the largest producers in the world, in terms of GDP, and the euro has maintained a competitive value against the U.S.dollar. EU and non-EU members must agree to many legal requirements in order to trade with the EU member states. 1 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  2. 2. EUROPEAN UNION HISTORY AND BRIEF INTRODUCTION OF EUROPEAN UNION The precursor to the European Union was established after World War II in the late 1940s in an effort to unite the countries of Europe and end the period of wars between neighboring countries. These nations began to officially unite in 1949 with the Council of Europe. In 1950 the creation of the European Coal and Steel Community expanded the cooperation. The six nations involved in this initial treaty were Belgium, France, Germany, Italy, Luxembourg, and the Netherlands. Today these countries are referred to as the "founding members." During the 1950s, the Cold War, protests, and divisions between Eastern and Western Europe showed the need for further European unification. In order to do this, the Treaty of Rome was signed on March 25, 1957, thus creating the European Economic Community and allowing people and products to move throughout Europe. Throughout the decades additional countries joined the community. In order to further unify Europe, the Single European Act was signed in 1987 with the aim of eventually creating a "single market" for trade. Europe was further unified in 1989 with the elimination of the boundary between Eastern and Western Europe - the Berlin Wall. Economy of the European Union The economy of the European Union generates a GDP of over €12.629 trillion (US$17.578 trillion in 2011) according to the International Monetary Fund (IMF), making it the largest economy in the world. The European Union (EU) economy consists of an Internal Market and the EU is represented as a unified entity in the World Trade Organization (WTO). Currency The official currency of the European Union is the euro used in all its documents and policies. The Stability and Growth Pact sets out the fiscal criteria to maintain for stability and (economic) convergence. The euro is also the most widely used currency in the EU, which is in use in 17 member states known as the Eurozone. All other member states, apart from Denmark and the United Kingdom, which have special optouts, have committed to changing over to the euro once they have fulfilled the requirements needed to do so. Also, Sweden can effectively opt out by choosing when or whether to join the European Exchange Rate Mechanism, which is the preliminary step towards joining. The remaining states are committed to join the Euro through their Treaties of Accession. Economies of member states Economic performance varies from state to state. The Growth and Stability Pact governs fiscal policy with the European Union. It applies to all member states, with specific rules which apply to the eurozone members that stipulate that each state's deficit must not exceed 3% of GDP and its public debt must not exceed 60% of GDP. However, many larger members have consistently run deficits substantially in excess of 3%, and the eurozone as a whole has a debt percentage exceeding 60%. 2 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  3. 3. EUROPEAN UNION Economic growth The EU's share of Gross world product (GWP) is stable at around one fifth. The twelve new member states of the European Union have enjoyed a higher average percentage growth rate than their elder members of the EU. Slovakia has the highest GDP growth in the period 2005-2011 among all countries of the European Union. Notably theBaltic states have achieved massive GDP growth, with Latvia topping 11%, close to China, the world leader at 9% on average for the past 25 years (though these gains have been in great part cancelled by the late2000's recession). Reasons for this massive growth include government commitments to stable monetary policy, export-oriented trade policies, low flat-tax rates and the utilisation of relatively cheap labour. For the last year (2011), Estonia had the highest GDP growth from all the states in EU (7,6%). The current map of EU growth is one of huge regional variation, with the larger economies suffering from stagnant growth and the new nations enjoying sustained, robust economic growth. Although EU27 GDP is on the increase, the percentage of Gross world product is decreasing due to the emergence of economic powers such as China, India and Brazil. In the medium to long term, the EU will be looking forward to increase GDP growth in Italy and the UK in order to stabilise growth in European Union states. This is to ensure sustained economic prosperity. Trade The European Union is the largest exporter in the worldand as of 2008 the largest importer of goods and services. Internal trade between the member states is aided by the removal of barriers to trade such as tariffs and border controls. In the eurozone, trade is helped by not having any currency differences to deal with amongst most members. The European Union Association Agreement does something similar for a much larger range of countries, partly as a so-called soft approach ('a carrot instead of a stick') to influence the politics in those countries. The European Union represents all its members at the World Trade Organization (WTO), and acts on behalf of member states in any disputes. When the EU negotiates trade related agreement outside the WTO framework, the subsequent agreement must be approved by each individual EU member. Unemployment The seasonally adjusted unemployment rate in the European Union (EU27) in March 2009 was 8.3% compared to 6.7% in March 2008. The Eurozone (EA16) unemployment figure for January 2009 was 8.2% compared to 7.3% in January 2008. The unemployment rate (EU25) had previously declined in prior years from 8.9% in March 2005 to 8.4% in March 2006 to 7.3% in March 2007. The rate varies widely by member state. There has been a steep upturn in the unemployment rate since 2008 due to the worldwide credit crunch and following recession. The countries within the EU which were most affected were Spain, Ireland and the Baltic countries with the unemployment rate doubling or in case of the Baltic countries nearly tripling. By comparison in March 2009 the United States had an unemployment rate of 8.6% (2008: 5.1; 2007: 4.4; 2006: 4.7) which was higher than the EU-27's unemployment rate but lower than the EU-16 Eurozone rate of 8.9%. Japan's unemployment rate remained comparatively steady at 4.4% (2008: 3.9; 2007: 4.0; 2006: 4.1). 3 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  4. 4. EUROPEAN UNION Industries The services sector is by far the most important sector in the European Union, making up 69.4% of GDP, compared to the manufacturing industry with 28.4% of GDP and agriculture with only 2.3% of GDP. Agriculture The agricultural sector is supported by subsidies from the European Union in the form of the Common Agricultural Policy (CAP). This currently represents 40–50% of the EU's total spending. It guarantees a minimum price for farmers in the EU. This is criticised as a form of protectionism, inhibiting trade, and damaging developing countries; one of the most vocal opponents is the UK, the third largest economy within the bloc, which has repeatedly refused to give up the annual UK rebate unless the CAP undergoes significant reform; France, the biggest benefactor of the CAP and the bloc's second largest economy, is its most vocal proponent. Tourism The European Union is a major tourist destination, attracting visitors from outside of the Union and citizens travelling inside it. Internal tourism is made more convenient for the citizens of some EU member states by the Schengen treaty and the Euro. All citizens of the European Union are entitled to travel to any member state without the need of a visa. France is the world's number one tourist destination for international visitors, followed by Spain, Italy and the United Kingdom at 2nd, 5th and 6th spots respectively. It is worth noting however a significant proportion of international visitors to EU countries are from other member states. 4 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  5. 5. EUROPEAN UNION WHY THE EUROPEAN UNION? I. Peace and stability Before becoming a real political objective, the idea of uniting Europe was just a dream in the minds of philosophers and visionaries. Victor Hugo, for example, imagined a peaceful ‗United States of Europe‘ inspired by humanistic ideals. The dream was shattered by the terrible wars that ravaged the continent during the first half of the 20th century. However, a new kind of hope emerged from the rubble of World War Two. People who had resisted totalitarianism during the war were determined to put an end to international hatred and rivalry in Europe and create the conditions for lasting peace. Between 1945 and 1950, a handful of courageous statesmen including Robert Schuman, Konrad Adenauer, Alcide de Gasperi and Winston Churchill set about persuading their peoples to enter a new era. New structures would be created in western Europe, based on shared interests and founded upon treaties guaranteeing the rule of law and equality between all countries. Robert Schuman (French foreign minister) took up an idea originally conceived by Jean Monnet and, on 9 May 1950, proposed establishing a European Coal and Steel Community (ECSC). In countries which had once fought each other, the production of coal and steel would be pooled under a common High Authority. In a practical but also richly symbolic way, the raw materials of war were being turned into instruments of reconciliation and peace. II. Bringing Europe together again The European Union encouraged German unification after the fall of the Berlin Wall in 1989. When the Soviet empire crumbled in 1991, the former communist countries of central and eastern Europe, after decades under the authoritarian yoke of the Warsaw Pact, decided that their future lay within the family of democratic European nations. The enlargement process continues to this day. Entry negotiations began with Turkey and Croatia in October 2005, while several countries in the Balkans have set out along the road that could one day lead to EU membership. III. Safety and security Europe in the 21st century still faces safety and security issues. The EU has to take effective action to ensure the safety and security of its members. It has to work constructively with the regions just beyond its borders: the Balkans, North Africa, the Caucasus and the Middle East. It must also protect its military and strategic interests by working with its allies, especially within NATO, and by developing a genuine common European security and defence policy. Internal security and external security are two sides of the same coin. The fight against terrorism and organised crime requires the police forces of all EU countries to work together closely. Making the EU an ‗area of freedom, security and justice‘ where everyone has equal access to justice and is equally protected by the law is a new challenge that requires close cooperation between governments. Bodies like Europol, the European Police Office, and Eurojust, which promotes cooperation between prosecutors, judges and police officers in different EU countries, also have a more active and effective role to play. 5 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  6. 6. EUROPEAN UNION IV. Economic and social solidarity The European Union was created to achieve the political goal of peace, but its dynamism and success spring from its involvement in economics. EU countries account for an ever smaller percentage of the world‘s population. They must therefore continue pulling together if they are to ensure economic growth and be able to compete on the world stage with other major economies. No individual EU country is strong enough to go it alone in world trade. The European single market provides companies with a vital platform for competing effectively on world markets. But Europe-wide free competition must be counterbalanced by Europe-wide solidarity. This has clear tangible benefits for European citizens: when they fall victim to floods and other natural disasters, they receive assistance from the EU budget. The Structural Funds, managed by the European Commission, encourage and supplement the efforts of the EU‘s national and regional authorities to reduce inequalities between different parts of Europe. Money from the EU budget and loans from the European Investment Bank (EIB) are used to improve Europe‘s transport infrastructure (for example, to extend the network of motorways and high-speed railways), thus providing better access to outlying regions and boosting trans-European trade. The EU‘s economic success will be measured in part by the ability of its single market of half a billion consumers to benefit as many people and businesses as possible. V. Identity and diversity in a globalised world Europe‘s post-industrial societies are becoming increasingly complex. Standards of living have risen steadily, but there are still significant gaps between rich and poor. Enlargement has widened the gap since countries have joined with living standards below the EU average. It is important for EU countries to work together to narrow the gap. But these efforts have not been made at the expense of compromising the separate cultural or linguistic characteristics of EU countries. On the contrary — many EU activities help to create new economic growth based on regional specialities and the rich diversity of traditions and cultures. United in diversity – a bilingual street sign in Malta. 6 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  7. 7. EUROPEAN UNION Half a century of European integration has shown that the EU as a whole is greater than the sum of its parts: it has much more economic, social, technological, commercial and political clout than if its member states had to act individually. There is added value in acting together and speaking with a single voice as the European Union. Why? Because the EU is the world‘s leading trading power and therefore plays a decisive role in international negotiations, such as those at the 149-country World Trade Organisation (WTO), as well as in the implementation of the Kyoto protocol on air pollution and climate change; Because it takes a clear position on sensitive issues affecting ordinary people, such as environmental protection, renewable energy resources, the ‗precautionary principle‘ in food safety, the ethical aspects of biotechnology and the need to protect endangered species; Because it launched important initiatives for sustainable development on the whole planet, in connection with the ‗Earth Summit‘ in 2002 in Johannesburg. The old saying ‗unity is strength‘ is as relevant as ever to today‘s Europeans. But the process of European integration has not smothered the different ways of life, traditions and cultures of its peoples. Indeed, the EU makes its diversityone of its key values. VI. Values The EU wishes to promote humanitarian and progressive values, and ensure that mankind is the beneficiary, rather than the victim, of the great global changes that are taking place. People‘s needs cannot be met simply by market forces or imposed by unilateral action. So the EU stands for a view of humanity and a model of society that the great majority of its citizens support. Europeans cherish their rich heritage of values, which includes a belief in human rights, social solidarity, free enterprise, a fair distribution of the fruits of economic growth, the right to a protected environment, respect for cultural, linguistic and religious diversity and a harmonious blend of tradition and progress. The Charter of Fundamental Rights of the European Union, which was proclaimed in Nice in December 2000, sets out all the rights recognised today by the EU‘s member states and their citizens. These values can create a feeling of kinship between Europeans. To take just one example, all EU countries have abolished the death penalty. 7 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  8. 8. EUROPEAN UNION LIST OF COUNTRIES AND THE YEAR OF ENTRY Austria (1995) Belgium (1952) Bulgaria (2007) Croatia (2013) Cyprus (2004) Czech Republic (2004) Denmark (1973) Estonia (2004) Finland (1995) France (1952) Germany (1952) Greece (1981) Hungary (2004) Ireland (1973) Italy (1952) Latvia (2004) Lithuania (2004) Luxembourg (1952) Malta (2004) Netherlands (1952) Poland (2004) Portugal (1986) Romania (2007) Slovakia (2004) Slovenia (2004) Spain (1986) Sweden (1995) United Kingdom (1973) 8 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  9. 9. EUROPEAN UNION Organizational Structure The EU is made up of multiple bodies and institutions. The most important are listed below, along with a summary of their functions: 1. European Commission: The European Commission acts as the executive of the European Union, and it is the only body that may propose new legislation. The Commission is made up of 27 commissioners, one from each member state. Each one is appointed in consultation with the member states and Parliament, although the Commission‘s purpose is to represent the European perspective as a whole, rather than the perspectives of individual member states. A new Commission is appointed every five years. The Commission is divided into departments, each of which is responsible for proposing new legislation and policies in a given area. The Commission also plays a major role in implementing and enforcing EU directives and regulations and it represents the EU in international negotiations. 2. Council of the European Union: The Council of the European Union, also known as the Council of Ministers, is the main legislative body of the EU, along with the Parliament. It is made up of 27 ―ministers,‖ one from each member state, who are assigned specific issue areas. Its chief responsibilities include passing laws (often, but not always, in conjunction with Parliament), coordinating economic, foreign, and criminal justice policy, and making treaties. Member states with larger populations receive more votes, but most decisions require assent by qualified majority voting, which requires not only assent by a majority of member states but also a minimum of 232 (out of a total 321) votes, though some require unanimity. 3. European Parliament: The European Parliament originally had a mostly advisory role in the EU; however, with the Treaty of Maastricht in 1993, it became an important legislating partner to the Council. The Parliament is currently made up of 785 members, elected directly by the population of the member states once every five years. Its major functions are to pass laws in conjunction with the Council and adopt or reject the EU budget. Parliament does not initiate legislation, but it may ask the European Commission to do so. Parliament is also responsible for holding the Commission politically accountable, and members of Parliament may question Commissioners 9 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  10. 10. EUROPEAN UNION regarding various policies. Parliament also has the power to dismiss the Commission by adopting a motion of censure. 4. European Court of Justice: The European Court of Justice is the major judicial body of the EU. It is made up of 27 judges, each one appointed by a member state in consultation with the other member states for six-year terms. For convenience, cases are typically decided by smaller chambers of judges, and the Court is assisted by advocates-general who present the issues of law in the case. The ECJ decides cases arising from EU law including, but not limited to, disputes about interpretation and application of treaties and/or failure to implement EU legislation. It may decide cases arising between member states, EU institutions, businesses, and individuals, and its decisions are binding. 5. European Court of First Instance: The European Court of First Instance is the lower court to the ECJ. It was created with limited jurisdiction in 1989, but in 2001, its jurisdiction was expanded to cover most issues that can be decided by the ECJ. However, the Court of First Instance does not decide cases brought by the member states. The Court‘s decisions are subject to appeal to the ECJ, and like the ECJ, it is made up of 27 judges, each one selected by a member state. 6. European Central Bank: The European Central Bank is charged with setting and implementing monetary policy and is responsible for issuing the Euro. 10 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  11. 11. EUROPEAN UNION 10 HISTORIC STEPS 1. On 9 May 1950, the Schuman Declaration proposed the establishment of a European Coal and Steel Community (ECSC), which became reality with the Treaty of Paris of 18 April 1951. This put in place a common market in coal and steel between the six founding countries (Belgium, the Federal Republic of Germany, France, Italy, Luxembourg and the Netherlands). The aim, in the aftermath of World War Two, was to secure peace between Europe‘s victorious and vanquished nations and bring them together as equals, cooperating within shared institutions. 2. The Six then decided, on 25 March 1957 with the Treaty of Rome, to build a European Economic Community (EEC) based on a wider common market covering a whole range of goods and services. Customs duties between the six countries were completely abolished on 1 July 1968 and common policies, notably on trade and agriculture, were also put in place during the 1960s. 3. So successful was this venture that Denmark, Ireland and the United Kingdom decided to join the Community. This first enlargement, from six to nine members, took place in 1973. At the same time, new social and environmental policies were implemented, and the European Regional Development Fund (ERDF) was established in 1975. 4. June 1979 saw a decisive step forward for the European Community, with the first elections to the European Parliament by direct universal suffrage. These elections are held every five years. 5. In 1981, Greece joined the Community, followed by Spain and Portugal in 1986. This strengthened the Community‘s presence in southern Europe and made it all the more urgent to expand its regional aid programmes. 6. The worldwide economic recession in the early 1980s brought with it a wave of ‗europessimism‘. However, hope sprang anew in 1985 when the European Commission, under its President Jacques Delors, published a White Paper setting out a timetable for completing the European single market by 1 January 1993. This ambitious goal was enshrined in the Single European Act, which was signed in February 1986 and came into force on 1 July 1987. 7. The political shape of Europe was dramatically changed when the Berlin Wall fell in 1989. This led to the unification of Germany in October 1990 and the coming of democracy to the countries of central and eastern Europe as they broke away from Soviet control. The Soviet Union itself ceased to exist in December 1991. At the same time, the member states were negotiating the new Treaty on European Union, which was adopted by the European Council, composed of presidents and/or prime ministers, at Maastricht in December 1991. The Treaty came into force on 1 November 1993. By adding areas of intergovernmental cooperation to existing integrated Community structures, the Treaty created the European Union (EU). 11 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  12. 12. EUROPEAN UNION 8. This new European dynamism and the continent‘s changing geopolitical situation led three more countries — Austria, Finland and Sweden — to join the EU on 1 January 1995. The Berlin Wall was pulled down in of the European continent gradually disappeared. 1989 and the old divisions 9. By then, the EU was on course for its most spectacular achievement yet, creating a single currency. The euro was introduced for financial (non-cash) transactions in 1999, while notes and coins were issued three years later in the 12 countries of the euro area (also commonly referred to as the euro zone). The euro is now a major world currency for payments and reserves alongside the US dollar. Europeans are facing globalisation. New technologies and ever increasing use of the Internet transform the economies, but also bring social and cultural challenges. In March 2000, the EU adopted the ‘Lisbon strategy’ for modernising the European economy and enabling it to compete on the world market with other major players such as the United States and the newly industrialised countries. The Lisbon strategy involves encouraging innovation and business investment and adapting Europe‘s education systems to meet the needs of the information society. At the same time, unemployment and the rising cost of pensions are putting pressure on national economies, making reform all the more necessary. Voters are increasingly calling on their governments to find practical solutions to these problems. 10. Scarcely had the European Union grown to 15 members when preparations began for a new enlargement on an unprecedented scale . In the mid-1990s, the former Soviet-bloc countries (Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia), the three Baltic states that had been part of the Soviet Union (Estonia, Latvia and Lithuania), one of the republics of 12 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  13. 13. EUROPEAN UNION former Yugoslavia (Slovenia) and two Mediterranean countries (Cyprus and Malta) began knocking at the EU‘s door. The EU welcomed this chance to help stabilise the European continent and to extend the benefits of European integration to these young democracies. Negotiations on future membership opened in December 1997. The EU enlargement to 25 countries took place on 1 May 2004 when 10 of the 12 candidates joined. Bulgaria and Romania followed on 1 January 2007. 13 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  14. 14. EUROPEAN UNION MONEY AND THE EU The EU budget is funded from sources including a percentage of each member country's gross national income. It is spent on efforts as diverse as raising the standard of living in poorer regions and ensuring food safety. The euro is the common currency of most EU countries. WHERE DOES EU MONEY COME FROM? The EU has various sources of income. It is not solely dependent on contributions from member countries but has its own resources in the form of import duties on products from outside the EU, and a percentage of the value-added tax levied by each country. The EU has several sources of income to finance its administration and activities and enable it to achieve its goals of reducing economic disparities between regions and developing rural areas. The member countries collect the money on behalf of the EU. The three main sources of revenue are: 0.73% of the gross national income of each member country, which accounts for twothirds of the EU budget. The basic principle behind the calculation of each EU country's contribution is one of solidarity and ability to pay. However, adjustments are made if this produces an excessive burden on particular countries. So-called traditional own resources, mainly import duties on products from outside the EU A percentage of each EU country‘s harmonised value-added tax revenue (VAT) The EU also receives taxes paid by EU staff on their salaries, contributions from non-EU countries to certain EU programmes and fines from companies that breach EU rules and regulations. 14 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  15. 15. EUROPEAN UNION HOW IS THE EU BUDGET SPENT Multiannual Financial Framework 2014 - 2020 The next MFF, which is now under discussion, will define the EU's long-term spending priorities The EU budget finances a vast array of activities, from rural development and environmental protection to protecting external borders and promoting human rights. The Commission, the Council and Parliament all have a say in how big the budget is and how it is allocated. But the Commission and EU countries are responsible for the actual spending. Drafting the budget The budget is decided jointly by the Commission, the Council and Parliament. The Commission submits a draft spending plan to the Council and Parliament for their consideration. They can make changes and, if they disagree, they can try to work out a compromise. Each year‘s budget falls within a long-term spending plan known as the ‗financial framework‘. This is a seven-year framework, currently running from 2007-13. It allows the EU to plan spending programmes effectively for several years in advance. Managing EU funds The Commission is ultimately responsible for allocating the budget. However, EU countries manage 76% of EU funds. In cases of fraud or undue payments, the Commission works with the European anti-fraud office and the EU countries to recover the money. To ensure transparency, information on beneficiaries of EU funds is available to the public. 15 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  16. 16. EUROPEAN UNION What the money is spent on There are roughly six areas of expenditure in the EU budget. Currently the largest share goes towards creating growth and jobs and reducing economic gaps between regions. Another big portion goes to agriculture, rural development, fisheries and protection of the environment. Other spending areas include the fight against terrorism, organised crime and illegal immigration. 16 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  17. 17. EUROPEAN UNION THE EURO The euro is the most tangible proof of European integration – the common currency in 17 out of 28 EU countries and used by some 332 million people every day. The benefits of the common currency are immediately obvious to anyone travelling abroad or shopping online on websites based in another EU country. EU monetary cooperation The Economic and Monetary Union involves the coordination of economic and fiscal policies, a common monetary policy and the euro as the common currency. The euro was launched on 1 January 1999 as a virtual currency for cash-less payments and accounting purposes. Banknotes and coins were introduced on 1 January 2002. Which countries use the euro? The euro (€) is the official currency of 17 out of 28 EU member countries. These countries, known collectively as the Eurozone are: o Austria o o o o o o o o o Belgium Cyprus Estonia Finland France Germany Greece Ireland Italy o o o o o o o Luxembourg Malta the Netherlands Portugal Slovakia Slovenia Spain 17 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  18. 18. EUROPEAN UNION Purpose of the euro A single currency offers many advantages, such as eliminating fluctuating exchange rates and exchange costs. Because it is easier for companies to conduct cross-border trade and the economy is more stable, the economy grows and consumers have more choice. A common currency also encourages people to travel and shop in other countries. At global level, the euro gives the EU more clout, as it is the second most important international currency after the US dollar. Managing the euro The independent European Central Bank is in charge of monetary issues in the EU. Its main goal is to maintain price stability. The ECB also sets a number of key interest rates for the euro area. Although taxes are still levied by EU countries and each country decides upon its own budget, national governments have devised common rules on public finances to be able to coordinate their activities for stability, growth and employment. The Economic and Financial Crisis The economic crisis has prompted intense and sustained action by the EU's national governments, the European Central Bank and the Commission since it erupted worldwide in 2008. All have been working closely together to support growth and employment, protect savings, maintain a flow of affordable credit for businesses and households, ensure financial stability, and put in place a better governance system for the future. 18 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  19. 19. EUROPEAN UNION WORK FOR THE EU The EU institutions employ over 40 000 men and women from the 28 EU member countries. The European Personnel Selection Office (EPSO) organises 'open competitions' to select personnel for permanent and non permanent positions. Besides permanent staff, the EU also employs contractual agents and temporary staff, offers traineeships and maintains databases of area experts. The European Personnel Selection Office (EPSO) is the first port of call for anyone wanting to work for the EU. Its website explains the selection process and gives advice on preparing for competitions. Recruitment of permanent staff EPSO organises 'open competitions' to select permanent staff. Competitions measure candidates' skills through a series of tests and assessments, ensuring the very best people are selected. Each year there are competitions for administrators, linguists, interpreters, translators, secretaries and other staff categories. EPSO recruits staff for all the EU institutions: European Commission – based in Brussels (Belgium) and Luxembourg. The Commission is the largest employer among the EU institutions, with staff in Europe and offices around the world. A number of specialised posts are available, for example for people with a background in science, languages or statistics/economics. European Parliament – based in Brussels, Luxembourg and Strasbourg (France) Council of the EU – based in Brussels European Court of Justice – based in Luxembourg Court of Auditors – based in Luxembourg European Economic and Social Committee – based in Brussels Committee of the Regions – based in Brussels European Ombudsman – based in Strasbourg European Data Protection Supervisor – based in Brussels. Whichever institution you are interested in, the selection procedure and type of contract are the same. 19 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  20. 20. EUROPEAN UNION Permanent officials are divided into administrators and assistants. Administrators (AD) Administrators are typically involved in drafting policies and monitoring the implementation of EU law, analysing and advising. In general, to apply for an administrator competition, you must have completed (at least) three years of university. Assistants (AST) Assistants usually work in supporting roles and are crucial for the internal management of the institutions. In general, to apply for an assistant competition, you must have completed (at least) secondary school. Other selection and recruitment procedures Contract staff Contract staff are hired for specific manual or administrative tasks. Contracts are generally for a limited period – usually starting with 6-12 months. Temporary staff Temporary staffs are recruited for specialized or temporary tasks with contracts of up to six years. Vacancies can be found on EPSO's website and on the websites of individual institutions and agencies. Interim staff Some institutions also take on local interim staff for up to six months – mainly for secretarial work. In this case recruitment is done by temping agencies. Traineeships Seven institutions also take on trainees for three to five months. Known as stagiaires, the trainees can be students, university graduates or linguists, and are given tasks similar to those of lower-grade administrators. Selection is organized by the institutions (not by EPSO). 20 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  21. 21. EUROPEAN UNION Contracting services For specific tasks (maintenance, canteens, etc.), staff are recruited via outside contractors selected through open tender procedures. See the contracting services websites for more information. Seconded national experts (SNEs) These are normally public-sector employees in their home country, seconded for a fixed period to an EU institution to share their expertise and learn about EU policies and procedures. National experts are selected through a specific procedure, which does not involve EPSO. Your country's permanent representation to the EU can inform you about current opportunities. EU experts The EU maintains databases with the names and qualifications of independent experts who can assist the institutions and agencies in specific areas. Experts create and maintain their own password-protected profile with information on work experience, education and skills. These databases are maintained by individual institutions and agencies (not EPSO). The Community Research and Development Information Service (CORDIS), for example, hosts a database of experts working under the 7th Framework Program for EU research. 21 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  22. 22. EUROPEAN UNION EU TREATIES The European Union is based on the rule of law. This means that every action taken by the EU is founded on treaties that have been approved voluntarily and democratically by all EU member countries. For example, if a policy area is not cited in a treaty, the Commission cannot propose a law in that area. A treaty is a binding agreement between EU member countries. It sets out EU objectives, rules for EU institutions, how decisions are made and the relationship between the EU and its member countries. Treaties are amended to make the EU more efficient and transparent, to prepare for new member countries and to introduce new areas of cooperation – such as the single currency. The main treaties are: Treaty of Lisbon Signed: 13 December 2007 Entered into force: 1 December 2009 Purpose: to make the EU more democratic, more efficient and better able to address global problems, such as climate change, with one voice. Main changes: more power for the European Parliament, change of voting procedures in the Council, citizens' initiative, a permanent president of the European Council, a new High Representative for Foreign Affairs, a new EU diplomatic service. The Lisbon treaty clarifies which powers: belong to the EU belong to EU member countries are shared. The Treaty establishing a constitution for Europe (2004) – with aims similar to the Lisbon Treaty – was signed but never ratified. Treaty of Nice Signed: 26 February 2001 Entered into force: 1 February 2003 Purpose: to reform the institutions so that the EU could function efficiently after reaching 25 member countries. Main changes: methods for changing the composition of the 22 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  23. 23. EUROPEAN UNION Commission and redefining the voting system in the Council. Treaty of Amsterdam Signed: 2 October 1997 Entered into force: 1 May 1999 Purpose: To reform the EU institutions in preparation for the arrival of future member countries. Main changes: amendment, renumbering and consolidation of EU and EEC treaties. More transparent decision-making (increased use of the co-decision voting procedure). Treaty on European Union - Maastricht Treaty Signed: 7 February 1992 Entered into force: 1 November 1993 Purpose: to prepare for European Monetary Union and introduce elements of a political union (citizenship, common foreign and internal affairs policy). Main changes: establishment of the European Union and introduction of the co-decision procedure, giving Parliament more say in decisionmaking. New forms of cooperation between EU governments – for example on defence and justice and home affairs Single European Act Signed: 17 February 1986 (Luxembourg) / 28 February 1986 (The Hague) Entered into force: 1 July 1987 Purpose: to reform the institutions in preparation for Portugal and Spain's membership and speed up decision-making in preparation for the single market. Main changes: extension of qualified majority voting in the Council (making it harder for a single country to veto proposed legislation), creation of the cooperation and assent procedures, giving Parliament more influence. Merger Treaty Brussels Treaty Signed: 8 April 1965 Entered into force: 1 July 1967 Purpose: to streamline the European institutions. Main changes: creation of a single Commission and a single Council to serve the then three European Communities (EEC, Euratom, ECSC). Repealed by the Treaty of Amsterdam. 23 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  24. 24. EUROPEAN UNION Treaties of Rome : EEC and EURATOM treaties Signed: 25 March 1957 Entered into force: 1 January 1958 Purpose: to set up the European Economic Community (EEC) and the European Atomic Energy Community (Euratom). Main changes: extension of European integration to include general economic cooperation. Treaty establishing the Signed: 18 April 1951 Entered into force: 23 July 1952 European Coal and Steel Community Expired: 23 July 2002 Purpose: to create interdependence in coal and steel so that one country could no longer mobilise its armed forces without others knowing. This eased distrust and tensions after WWII. The ECSC treaty expired in 2002 24 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  25. 25. EUROPEAN UNION HOW EU DECISIONS ARE MADE The EU‘s standard decision-making procedure is known as 'codecision'. This means that the directly elected European Parliament has to approve EU legislation together with the Council (the governments of the 28 EU countries). Drafting EU law Before the Commission proposes new initiatives it assesses the potential economic, social and environmental consequences that they may have. It does this by preparing 'Impact assessments' which set out the advantages and disadvantages of possible policy options. The Commission also consults interested parties such as non-governmental organisations, local authorities and representatives of industry and civil society. Groups of experts give advice on technical issues. In this way, the Commission ensures that legislative proposals correspond to the needs of those most concerned and avoids unnecessary red tape. Citizens, businesses and organisations can participate in the consultation procedure via the website Public consultations. National parliaments can formally express their reservations if they feel that it would be better to deal with an issue at national rather than EU level. Review and adoption The European Parliament and the Council review proposals by the Commission and propose amendments. If the Council and the Parliament cannot agree upon amendments, a second reading takes place. In the second reading, the Parliament and Council can again propose amendments. Parliament has the power to block the proposed legislation if it cannot agree with the Council. If the two institutions agree on amendments, the proposed legislation can be adopted. If they cannot agree, a conciliation committee tries to find a solution. Both the Council and the Parliament can block the legislative proposal at this final reading. Sessions of the European Parliament and some Council sessions can be watched live online. 25 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  26. 26. EUROPEAN UNION How is legislation adopted? Ordinary legislative procedure (formerly known as ‗Codecision‘) Step-by-step explanation of the ordinary legislative procedure – where the European Parliament passes laws jointly with the EU Council – and list of past laws subject to this method Official Rules of Procedure of the European Council How the European Council operates European judicial cooperation in civil cases Cooperation between national courts in civil cases 26 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  27. 27. EUROPEAN UNION REGULATION DERECTIVES AND OTHER ACTS The aims set out in the EU treaties are achieved by several types of legal act. Some are binding, others are not. Some apply to all EU countries, others to just a few. Regulations A "regulation" is a binding legislative act. It must be applied in its entirety across the EU. For example, when the EU wanted to protect the names of agricultural products coming from certain areas such as Parma ham, the Council adopted a regulation. Directives A "directive" is a legislative act that sets out a goal that all EU countries must achieve. However, it is up to the individual countries to decide how. This was the case with the working time directive, which stipulates that too much overtime work is illegal. The directive sets out minimum rest periods and a maximum number of working hours, but it is up to each country to devise its own laws on how to implement this. Decisions A "decision" is binding on those to whom it is addressed (e.g. an EU country or an individual company) and is directly applicable. For example, when the Commission issued a decision fining software giant Microsoft for abusing its dominant market position , the decision applied to Microsoft only. Recommendations A "recommendation" is not binding. When the Commission issued a recommendation that pay structures for financial-sector employees should not encourage excessive risk taking , this did not have any legal consequences. A recommendation allows the institutions to make their views known and to suggest a line of action without imposing any legal obligation on those to whom it is addressed. 27 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  28. 28. EUROPEAN UNION Opinions An "opinion" is an instrument that allows the institutions to make a statement in a non-binding fashion, in other words without imposing any legal obligation on those to whom it is addressed. An opinion is not binding. It can be issued by the main EU institutions (Commission, Council, Parliament), the Committee of the Regions and the European Economic and Social Committee. While laws are being made, the committees give opinions from their specific regional or economic and social viewpoint. For example, the Committee of the Regions issued an opinion on how regions contribute to the EU‘s energy goals 28 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  29. 29. EUROPEAN UNION ADVANTAGES AND DISADVANTAGES Advantages 1. Transaction costs will be eliminated. For instance, Uk firms currently spend about £1.5 billion a year buying and selling foreign currencies to do business in the EU. With the EMU this is eliminated, so increasing profitability of EU firms. Advice to young people: You can go on holiday and not have to worry about getting your money changed, therefore avoiding high conversion charges. 2. Price transparency. Eu firms and households often find it difficult to accurately compare the prices of goods, services and resources across the EU because of the distorting effects of exchange rate differences. This discourages trade. According to economic theory, prices should act as a mechanism to allocate resources in an optimal way, so as to improve economic efficiency. There is a far greater chance of this happening across an area where E.M.U exists. Advice to young people: We can buy things without wrecking our brains trying to calculate what price it is in our currency. 3. Uncertainty caused by Exchange rate fluctuations eliminated. Many firms become wary when investing in other countries because of the uncertainty caused by the fluctuating currencies in the EU. Investment would rise in the EMU area as the currency is universal within the area, therefore the anxiety that was previously apparent is there no more. 4. Single currency in single market makes sense. Trade and everything else should operate more effectively and efficiently with the Euro. Single currency in a single market seems to be the way forward. 5. Rival to the "Big Two". If we look out in the world today we can see strong currencies such as the Japanese Yen and The American $. America and Japan both have strong economies and have millions of inhabitants. A newly found monetary union and a new currency in Europe could be a rival to the "BIG TWO". EMU can be self-supporting and so they could survive without trading with anyone outside the EMU area. This fact makes the Euro very strong already, and even George Soros couldn't affect it (well, hopefully!!!!). The situation that EMU is in is good as it seems that it can survive on its own, with or without the help of Japan and U.S.A. 6. Prevent war. The EMU is, and will be a political project. It's founding is a step towards European integration, to prevent war in the union. It's a well known fact that countries who trade effectively together don't wage war on each other and if EMU means more happy trade, then this means, peace throughout Europe and beyond (we hope). 7. Increased Trade and reduced costs to firms. Proponents of the move argue that it brings considerable economic trade through the wiping out of exchange rate fluctuations, but as well as this it helps to lower costs to industry because companies will not have to buy foreign exchange for use within the EU. For them, EU represents the completion of the Single European Market. It is vital if Europe is to compete with the other large trading blocs of the Far East and North America. 29 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  30. 30. EUROPEAN UNION Disadvantages 1. The instability of the system. Throughout most of the 1980s the UK refused to join the ERM (Exchange rate mechanism). It argued that it would be impossible to maintain exchange rate stability within the ERM, especially in the early 1980s when the pound was a petro-currency and when the UK inflation rate was consistently above that of Germany. When the UK joined the ERM in 1990 there had been three years of relative currency stability in Europe and it looked as though the system had become relatively robust. The events of Sept. 1992, when the UK and Italy were forced to leave the system, showed that the system was much less robust than had been thought. 2. Over estimation of Trade benefits. Some economists argue that the trade and cost advantages of EMU have been grossly over estimated. There is little to be gained from moving from the present system which has some stability built into it, to the rigidities which EMU would bring. 3. Loss of Sovereignty. On the political side, it is argued that an independent central bank is undemocratic. Governments must be able to control the actions of the central banks because Governments have been democratically elected by the people, whereas an independent central bank would be controlled by a non elected body. Moreover, there would be a considerable loss of sovereignty. Power would be transferred from London to Brussels. This would be highly undesirabel because national governments would lose the ability to control policy. It would be one more step down the road towards a Europe where Brussels was akin to Westminster and Westminster akin to a local authority. 4. Deflationary tendencies. Perhaps the most important economic argument relates to the deflationary tendencies within the system. In the 1980s and 90's France succeeded in reducing her inflation rates to German levels, but at the cost of higher unemployent, For the UK, it can be aruged, that membership of the ERM between 1990 and 1992 prolonged unnecessarily the recessional period. This is because the adjustment mechanism acts rather like that of the gold standard. Higher inflation in one ERM country means that it is likely to generate current account deficits and put downward pressure on its currency. To reduce the deficit and reduce inflation, the country has to deflate its economy. In the UK, it could be argued that the battle to bring down inflation had been won by the time the UK joined the ERM in 1990. However, the UK joined at too high an exchange rate. It was too high because the UK was still running a large current account deficit at an exchange rate of around 3 Dm to the pound. The UK government then spent the next two years defending the value of the pound in the ERM with interest rates which were too high to allow the economy to recover. Many forecasts predicted that, had the UK not left the ERM in Sept 1992, inflation in the UK in 1993 would have been negative (ie prices would have fallen).The economic cost of this would have been continued unemployment at 3million and a stagnant economy. When the UK did leave the ERM and it rapidly cut interest rates from 10% to five and a half %, there was strong economic growth and the current account position improved, but there was an inflation cost. Another problem that the early 1990s highlighted was that the needs of one part of Europe can have a negative impact on the rest of Europe. In the early 1990s, the Germans struggled with the economic consequences of German reunification. There was a large increase in spending in Germany with a consequent rise in inflation. The Bundesbank responded by raising German interest rates. As a result, there was an upward pressure on the DM as speculative money was attracted into Germany. Germansy's ERM partners were then forced to raise their interst rates to defend their currencies. However, higher interest rates forced most of Europe into recession in 1992 1993. Countries such as France couldn't then get out of recession by cutting interest rates because this would 30 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  31. 31. EUROPEAN UNION have put damaging strains on the ERM. The overall result was that Europe suffered a recession because of local reunification problems in Germany. Critics of the ERM and EMU argue that this could be repeated frequently if EMU were ever to be achieved. Local economies would suffer economic shocks because of policies, forced on them, designed to meet the problems of other parts of Europe. One way around this would be to have large transfers of money from region to region when a local area experienced a recession, e.g. N. Ireland which suffered structural unemployment for most of the post war period, has had its economy propped up by large transfers of resources from richer areas of the UK with lower unemployment. However, regional transfers are very small at the moment unfortunately. Moreover to approximate the regional transfers which occur at the moment in, say, Britain, there would have to be a huge transfer of expenditures from national governments to Brussels - just what anti Europeans are opposed to. 8. The Political agenda. There is also a political agenda to European bank (the European System of Central Banks -ESCB), the complete removal of national control over monetary policy and the partial removal of control over fiscal policy. Individual nation states will lose sovereignty (i.e. the ability to control their own affairs). It will be a considerble step down the road towards political union. There are many in the EU who faviour economica dn political union and they are very much in facour ot EMU. There are also many who wish to keep national sovereignty and are strugging to prevent EMU, whatever its merits might be, from going ahead. 9. Inflation From the mid-1980s onwards, there were a number of economists and politicians who argued that, for the UK at least, EMU provided the best way forward to achieve low inflation rates throughout the EU. During the first half of the 1980s high inflation countries, such as France and Italy were forced to adopt policies which reduced their inflation rates to something approximating the German inflation rates to something approximating the German inflation rate. If they had not done this, the franc and the lira would have had to be periodically devalued, negating the fixed exchange rate advantages of the system. Effectively, the German central bank, the Bundesbank, set inflation targets and therefore monetary targets for the rest of the EU. At the time, there was much discussion of why Germany had a better inflation record than many other European countries. The consensus emerged that it was because the Bundesbank, the German central bank, was independant of the German Government. In countries such as the UK and France, central banks were controlled by governments. If the UK government decided to loosen monetary policy, for example, by reducing interest rates, it had the power to order the Bank of England to carry out this policy on its behalf. There have always been especially strong pressures before an election for UK governments to loosen the monetary reins and create a boom in the economy, with the subsequent increase in inflation following the election. The Bundesbank, in contrast, was independent of government. By law it has a duty to maintain stable prices. It can resist pressures from the German government to pursue reflation policies if it believes that these will increase inflation within the economy. Events of the early 1990s have shaken the naieve faith that linkage to the independent ESBC, the central bank of Europe would solve all inflationary problems. This is because German inflation rates in the early 1990s rose to over 4% as Germany strugged with the consequences of unification. In 1993, inflation was nearly three times as high in Germany as in the UK and twice as high as that in France. Some countries, such as France, have made their central banks independent on the Germany model and therefore arguably don't need to the EMU link to Germany to maintained low inflation.The UK has gone a little way towards giving more power to the central bank by publishing reports of monthly meetings between the Chancellor of the Exchequer and the Governenor of the Bank of England. This forces the Government to justify its monetary policy publically and makes it harder for it to use interest rates for short term political ends. 31 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  32. 32. EUROPEAN UNION THE EUROPEAN UNION ON THE WORLD STAGE In economic, trade and monetary terms, the European Union has become a major world power. However, some have described the EU as an economic giant but a political dwarf. This is an exaggeration. It has considerable influence within international organisations such as the World Trade Organisation (WTO) and the specialised bodies of the United Nations (UN), and at world summits on the environment and development. Nevertheless, it is true that the EU and its members have a long way to go, in diplomatic and political terms, before they can speak with one voice on major world issues like peace and stability, relations with the United States, terrorism, the Middle East and the role of the UN Security Council. What is more, the cornerstone of national sovereignty, namely military defence systems, remain in the hands of national governments, whose ties are those forged within alliances such as NATO. I. An embryonic common defence policy The common foreign and security policy (CFSP) and the European security and defence policy (ESDP), introduced by the Treaties of Maastricht (1992), Amsterdam (1997) and Nice (2001), define the EU‘s main tasks in the area of defence. The EU has thereby developed its ‗second pillar‘, the policy domain in which action is decided by intergovernmental agreement and in which the Commission and the Parliament play only a minor role. Decisions in this domain are taken by consensus, although individual states can abstain. (a) The political and strategic landscape in 2006 More than half a century of Cold War has ended — Russia has a new orientation and the former communist countries have joined NATO and the EU almost simultaneously. The continent of Europe is coming together peacefully, and European countries are working together to fight international crime, people trafficking, illegal immigration and money laundering. The enlarged EU has established a partnership structure with its neighbours, some of whom have medium-term prospects of joining the European Union. The United States have accepted that, for military action in which the Americans are not involved, Europe can use some of NATO‘s logistical capacity such as its intelligence, communications, command facilities and transport capabilities. The terrorist violence that has scarred the world since the 11 September 2001 attacks on New York and Washington and the bombings in Madrid in 2004 and London in 2005 has profoundly altered the strategic landscape. European countries have to work more closely together to uncover information that will help prevent terrorists and their backers from carrying out attacks. Cooperation with the United States and all countries that support democracy and human rights now goes beyond the framework of traditional defensive alliances. 32 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  33. 33. EUROPEAN UNION Helping out in tough times – EU soldiers help restore peace in the Congo. (b) Tangible achievements for security and defence Under the Amsterdam Treaty, Javier Solana was appointed the EU‘s first High Representative for the Common Foreign and Security Policy (CFSP) in 1999. EU member states have set a specific goal as part of the task of establishing a European security and defence policy. This is to be able to deploy a rapid reaction force with naval and air support and sustain it for one year. This rapid reaction force will not yet be a real European army. Instead it will be made up of contingents from the existing national armed forces. However, following the establishment of a Political and Security Committee (PSC), a European Union Military Committee (EUMC) and a European Union Military Staff (EUMS), under the authority of the Council and located in Brussels, the Union already has a political and military tool for carrying out the missions that it has set for itself: humanitarian missions outside Europe, peacekeeping operations and other crisis-management tasks. As military technology becomes ever more sophisticated and expensive, EU governments are finding it increasingly necessary to work together on arms manufacture. Moreover, if their armed forces are to carry out joint missions, their systems must be interoperable and their equipment sufficiently standardised. The European Council in Thessaloniki decided, in 2003, to establish a European Defence Agency. Since 2003, the EU has undertaken a series of peacekeeping and crisis management missions. The most important of these has been in Bosnia and Herzegovina where a European Union military force (EUFOR) of 7 000 troops replaced NATO peacekeeping forces in December 2004. 33 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  34. 34. EUROPEAN UNION II. A trade policy that is open to the world The European Union supports the rules-based system of the World Trade Organisation (WTO), which provides a degree of legal certainty and transparency in the conduct of international trade. The WTO sets conditions under which its members can defend themselves against unfair practices like dumping (selling below cost) through which exporters compete against their rivals. It also provides a procedure for settling disputes that arise between two or more trading partners. Wine is one the EU’s main exports to its biggest trade partner, the US. The EU‘s trade policy is closely linked to its development policy. Under its general system of preferences (GSP), the EU has granted duty-free or cut-rate preferential access to its market for most of the imports from developing countries and economies in transition. It goes even further for the world‘s 49 poorest countries. All of their exports, with the sole exception of arms, enjoy duty-free entry to the EU market under a programme launched in 2001. The EU does not, however, have specific trade agreements with its major trading partners among the developed countries like the United States and Japan. Here, trade relations are handled through the WTO mechanisms. The United States and the European Union are seeking to develop relations founded on equality and partnership. However, EU countries are not always in agreement on the type of diplomatic, political and military ties to establish with the United States. The European Union is increasing its trade with the emerging powers in other parts of the world, from China and India to Central and South America. Trade agreements with these countries also involve technical and cultural cooperation. 34 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES
  35. 35. EUROPEAN UNION III. Relations between the EU and the Mediterranean countries Given their geographical proximity, historical and cultural ties, and current and future migration flows, the countries on the southern shores of the Mediterranean are partners of prime importance. This is why the EU has traditionally chosen to pursue a policy of regional integration. In November 1995, the EU laid the foundations for a new Euro-Mediterranean partnership at the Barcelona Conference, which was attended by all the EU member states and the Mediterranean countries (except for Albania, Libya and the countries of former Yugoslavia). This conference made it possible to trace the outline of a new partnership involving: political dialogue between the participating countries and a security partnership based, in particular, on mechanisms for arms control and the peaceful resolution of conflicts; stepping up economic and trading relations between the two regions: the key to this is the creation of a Euro-Mediterranean free trade area by 2010; partnership in social and cultural fields. The EU granted financial assistance to the tune of €5.3 billion to the Mediterranean countries in 2000–06. This aid continues in the budget period 2007–13, under the European Neighbourhood and Partnership Instrument (ENPI) which merges into one the previously separate support programmes for the Mediterranean countries and for its other neighbours among the successor states of the former Soviet Union. 35 B.C.C.A INSTITUTE OF MANAGEMENT STUDIES