Question

1. Is there any economic merit in understanding how the EU works and its legacy? Discuss

2. Measure how the EU has attained its goals and values since 60 + years of its inception.

3. Bureaucracies, such as the EU always take time to reform. With an understanding of some of the key institutions, state and justify which branch you believe should be reformed urgently and propose options as to what best remedies should be put in place.

4. What arguments would you put forward to an EU official to counterbalance an enthusiastic official from an independent emerging economic nation stating, “…We shall always be a small minority in the world, but, when a small nation accomplishes something with its limited means, what it achieves has an immense and exceptional value,…”(Quotation by Tomas Garrigue Masaryk 1850 – 1937, chief founder and first president of Czechoslovakia)?

Answer 1

Two world wars impelled prominent leaders 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 statesmen including Robert Schuman, Konrad Adenauer, Alcide de Gasperi and Winston Churchill set the ball rolling in persuading their peoples to enter a new era.

West European nations create the Council of Europe in 1949. It is a first step towards cooperation between them, but six countries namely, Belgium, France, West Germany, Italy, Luxembourg and the Netherlands decided to go further.

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).

Thus, EU can trace its origins from the European Coal and Steel Community (ECSC) formed in 1951 by the Inner Six countries of Belgium, France, West Germany, Italy, Luxembourg and the Netherlands.

In December 1955, the Council of Europe adopts the blue flag with 12 gold stars as its emblem.

Led by the success of the Coal and Steel Treaty, the six countries expand cooperation to other economic sectors. The six nations sign the ‘Treaty of Rome’ or the Treaty on the Functioning of the European Union on 25 March, 1957, establishing the European Economic Community (EEC), or ‘Common Market’. The intention behind creating EEC was to promote free movement of people, goods and services across borders.

The European Court of Justice replaces the ECSC Court of Justice, and is set up in Luxembourg in 1958.

The European Free Trade Association (EFTA) convention is signed in Stockholm, Sweden in January 1960, which includes Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom, and enters into force in May.

At the end of the 1960 decade, the Organisation for European Economic Cooperation (OEEC) becomes the Organisation for Economic Cooperation and Development (OECD).

The period 1962 is marked by the significant development as the regulations creating a common agricultural policy (CAP) enter into force in July. CAP establishes a single market for agricultural products and for financial solidarity through a European Agricultural Guidance and Guarantee Fund (EAGGF).

The EEC Council of Ministers, in February 1967, harmonise indirect taxes in the Community, to adopt the principle of the added-value tax system and to approve the first medium-term economic policy programme defining and fixing the aims of the economic policy of the Community going forward.

The Treaty merging the executives of the three Communities (ECSC, EEC, Euratom) is signed in Brussels and enter into force on 1 July, 1967.

As a result, the European Communities have a single Commission and a single Council. However, both continue to act in accordance with the rules governing each of the Communities. The new Commission, with Jean Rey as its president, takes office.

In March 1970, the Commission submits a memorandum to the Council on the preparation of a plan for the establishment of economic and monetary union.

The European Monetary System enters into force in 1979.

In 1991, The Maastricht European Council adopts a Treaty on European Union. This lays the foundation for a common foreign and security policy, closer cooperation on justice and home affairs and the creation of economic and monetary union, including a single currency. While in February 1992, The Treaty on European Union is signed at Maastricht that creates a single market in 1993.

The legacy of EU formation can be summarised decade-wise as follows:

1951: The European Coal and Steel Community is set up by the six founding members

1957: The same six countries sign the Treaties of Rome, setting up the European Economic Community (EEC) and the European Atomic Energy Community (Euratom)

1973: The Communities expand to nine Member States and introduce more common policies

1979: The first direct elections to the European Parliament (EP)

1981: The first Mediterranean enlargement

1992: The European single market becomes a reality

1993: The Treaty of Maastricht establishes the European Union (EU)

1999: The currency euro is launched on 1 January 1999, but for the first three years it was an ‘invisible’ currency, only used for accounting purposes and electronic payments. While, coins and banknotes were launched on 1 January 2002, and in 12 EU nations witnesses biggest cash changeover in history.

2002: The euro comes into circulation

2007: The EU has 27 Member States

2009: The Lisbon Treaty comes into force, changing the way the EU works

The single market is one of the European Union’s greatest achievements. Restrictions on trade and free competition between member countries have gradually been eliminated, thus helping standards of living to rise. The single market has not yet become a single economy: some sectors (in particular services of general interest) are still subject to national laws. Freedom to provide services is beneficial, as it stimulates economic activity. The financial crisis that started in 2008 has led the EU to tighten up its financial legislation. Over the years the EU has introduced a number of policies (on transport, competition, etc.) to help ensure that as many businesses and consumers as possible benefit from opening up the single market.

Thus, economic merits of EU outweighs in terms of increasing the continent’s potential for trade and economic growth.

The single currency euro is shared by 18 of the 28 Member States of the European Union. Some of the advantages of euro include, travellers are spared the cost and inconvenience of changing currencies; shoppers can directly compare prices in different countries; prices are stable thanks to the European Central Bank, whose job it is to maintain this stability. Euro has also become a major reserve currency besides the US dollar. During the 2008 financial crisis, a common currency protected euro area countries from competitive devaluation and from attack by speculators.

As a single entity, EU has more influence on the world stage when it speaks with a single voice in international affairs such as trade negotiations.

An area that requires urgent attention is to develop military co-operation among the EU Member nations as a peacekeeping force.