The European Union (EU), as the name indicates, is an assortment of 28 European nations having common social, security and economic policies. Headquartered in Brussels, Belgium, the EU is not one big country (unlike the United Kingdom) or continent. The member countries are independent but must cede to EU agreements. Set up in 1993, the member countries (as of August, 2016) are Austria, Bulgaria, Belgium, Cyprus, Croatia, Denmark, the Czech Republic, Finland, Estonia, Germany, France, Hungary, Greece, Italy, Ireland, Lithuania, Latvia, Malta, Luxembourg, Poland, the Netherlands, Romania, Portugal, Slovenia, Slovakia, Sweden, and Spain. The United Kingdom, once a member, chose to leave the EU in 2016.

Background/Purpose

European Union flag. Image credit: Pixabay
European Union flag. Image credit: Pixabay

After World War II, which caused major destruction of European economies and infrastructure, many western European nations became apprehensive over their military security and economic prosperity, and wanted to revive Europe’s economics. Prior to this, during the 1950s, the European neighbor countries (especially Eastern and Western Europe) had frequent bloody wars between themselves, which majorly contributed to the Second World War. The concerned economies, especially France and Germany, wanted to ensure they never locked horns with each other ever again. This notion helped lay the foundations for the EU.

The EU seeks closer social, political and economic ties between them to attain military, security, and economic growth. In other words, the EU functions as one market that permits free movement of capital, goods, people and services between member countries. Beyond economics and politics, the EU is also interested in bringing down regional inequalities, environment preservation, human rights and investments in research and education. The other salient features of the EU include:

  • Border controls between EU member countries are almost none; however, random spot checks could take place if activities relating to drugs and crime are suspected.
  • Member countries are supposed to share technologies relating to research and development, environment protection, and energy with each other.
  • Any good manufactured legally in a particular EU country could be sold sans duties or tariffs to other member countries.
  • Taxes are standardized and practitioners in the field of medicine, law, banking, tourism, insurance, etc. could seamlessly function in any other member country.

The EU is a culmination of the efforts to bring an end to centuries of wars and disagreements between European countries. It’s considered among the most successful efforts to bring the majority of Europe together. Almost every new set of policies or rules the EU adopts is courtesy or based on treaties. And for all its efforts towards economy, environment and human rights, the EU won the Nobel Peace Prize in 2012.

Origin and Developments

Many organizations contributed towards building the foundation for the EU. The European Union’s roots lie in the European Coal and Steel Community (ECSC) – comprising France, Belgium, Germany, Italy, the Netherlands and Luxembourg. Proposed by Robert Schuman (former French foreign minister) in 1950, the community was set up in 1952 after its six member nations’ signing of the Treaty of Paris came into effect. ECSC facilitated a free-trade environment for many key military and economic resources such as coke, coal, scrap, steel, and iron ore.

In 1957, ECSC members signed the Treaty of Rome, which resulted in the establishment of the European Economic Community (EEC), also called the Common Market, and the European Atomic Energy Community (Euratom). Euratom was formed to aid with the development, research and consumption of atomic energy. And EEC led to the creation of a common market where there were almost no barriers to movement of capital, goods, services, and labor.

EEC membership was restricted to France, Germany, Belgium, the Netherlands, Italy and Luxembourg. Therefore, another trade confederation called the European Free Trade Association (EFTA) was formed by Britain, Denmark, Austria, Norway, Finland, Sweden, Portugal and Switzerland. However, the EFTA’s goals weren’t as holistic as EEC objectives; and it also delayed the process of European political and economic integration. 

In 1967, EEC members signed the Brussels Treaty, merging the EEC, Euratom and the High Authority of the ECSC as a single commission, which was referred to as the European Communities (EC). New members first joined EC in 1973 with Denmark, the United Kingdom, and Ireland. Greece joining the group in 1981, with Spain and Portugal becoming EC members in 1986. Finland, Sweden and Austria entered EC in 1995. In 1993, the European Union replaced the European Community courtesy the Maastricht Treaty. Also, the currency “euro” was created during this period.

Ever since its birth, EC has made efforts to strengthen the group’s economic integration – for instance, setting up the European Monetary System (EMS) in 1979 to link currencies of member countries and keep exchange rates stables; and passing the Single European Act in 1987 for strengthening the community’s ability to regulate members’ social, foreign and economic policies. However, EC’s biggest step with regard to bringing about real economic integration among EC members is the 1992 Maastricht Treaty ratification. Thereafter, the European Communities was called the European Union.

Various EU Treaties/Acts

  • Treaty of Paris (signed on 18 April 1951; made effective on 23 July 1952): Signed to facilitate economic expansion, improved standard of living, and employment growth – courtesy a common steel and coal market.
  • Treaty of Rome (signed on 25 March 1957; made effective on 1 January 1958): Responsible for creating the EEC or Common Market, and Euratom.
  • Merger Treaty (signed on 8 April 1965; made effective on 1 July 1967): Also called the Brussels Treaty, the Merger Treaty merged the ECSC, Euratom and EEC to streamline European institutions’ activities.
  • Single European Act (signed on 17 February and 28 February 1987; made effective on 1 July 1987): Revised the Treaty of Rome and amended rules governing European institutions’ operation and authority with relating to common foreign policy, environment and research and development.
  • Maastricht Treaty (signed on 7 February 1992; made effective on 1 November 1993): Helped create the European Union, reflecting all the member states’ serious intention to set up a common monetary and economic union.
  • Treaty of Amsterdam (signed on 2 October 1997; made effective on 1 May 1999): Brought about employment, living and working conditions and similar legal and social problems within the orbit of the EU.
  • Treaty of Lisbon (signed on 13 December 1997; made effective on 1 December 2009): Brought into force for making the EU more efficient, democratic, united and transparent.
  • Treaty of Nice (signed on 26 February 2001; made effective on 1 February 2003): Reformed voting laws of the EU for the efficient functioning of the Union after having grown to 25 member countries.
  • Treaty of Accession (signed on 9 December 2011; made effective 1 July 2013): Confirmed inclusion of Croatia in the EU.

EU Member Countries and Entry Requirements

The EU started with 12 member countries: Germany, France, Denmark, Belgium, Italy, Greece, the Netherlands, the Republic of Ireland, Portugal, Spain, Britain and Luxembourg. In 1995, Austria, Sweden, and Finland were added. 10 new members joined the party in 2004: Cyprus, Czech Republic, Hungary, Estonia, Lithuania, Latvia, Poland, Malta, Slovenia and Slovakia. Most of these countries were part of the erstwhile Soviet Union. The year 2007 saw Bulgaria and Romania seeking membership – it’s worth mentioning that both were unwilling to join the EU in 2004. Croatia is the latest EU member, having joined the group in 2013.

To make clear the requirements for countries to enter the EU, a meeting was held in 1993, in Copenhagen, Denmark. The requirements, collectively referred to as Copenhagen criteria, are:

  • An economically stable democracy that respects law and human rights
  • A market economy that’s functional and competitive
  • Acceptance of membership obligations, which includes the EU law

Working Mechanism/ Structure

The EU has four administrative bodies to help it tackle particular aspects of politics and economics: Council of the European Union (comprising foreign ministers or representatives of each member state); European Commission (EU’s executive organization); European Parliament (comprising representatives from each member state and which takes up matters of interest relating to the EU and individual member countries; however, it cannot make or exercise legislation); and Court of Justice (comprising EU member governments-appointed judges and advocates to help member countries interpret EU laws, besides assisting with regulation).

Some of the other bodies or committees part of the EU are:

  • Economic and Social Committee (ESC): An advisory body that’s representative of employer, consumer and labor interests.
  • European Social Fund (ESF): It focusses on making sure workers are adequately trained to keep their employability status relevant in the dynamic economic environment.
  • European Regional Development Fund (ERDF): The ERDF’s focus lies in erecting economic infrastructure in EU’s lesser developed nations.
  • European Investment Bank (EIB): The bank funds projects of interest to EU states, helping enhance EU industries’ competitiveness at the global level. The EIB gets its funds from EU member countries and also from global capital markets.
  • European Central Bank: The bank is responsible for devising and executing the monetary policy of the EU, along with managing the euro.

EU Limitations and Challenges

The EU has achieved a lot since its birth in 1993; however, there are still several challenges and milestones ahead. First, the EU entry criteria aren’t the most relaxed and several EU members have had difficulties adhering to them. Next, the European Central Bank, set up courtesy the Treaty on European Union, took over the operations of the member states’ national banks, but fiscal policy creation is still the responsibility of specific member states’ national governments. Moreover, political institutions of member states are more concerned about their national constituencies during economic instabilities and not the Eurozone.