European Union

1
European Union

• By
• Flora Wang
• Travis Pierce

2
European Union

• The most integrated economy today
• Founded upon numerous treaties and has undergone
  several expansions
• Grow from 6 member states to 27
• Generates 30 of the nominal gross world product
• 16/27 member states use the same currency the
  euro

3
History of Formation

• 1951 Treaty of Paris forms the European Coal
  and Steel Community (ECSC)
• Regulate European industry improve commerce,
  after WWII
• Six founding states
• Belgium Italy
• France Luxembourg
• Germany Netherlands

4
History of Formation contd.

• 1957 Treaty of Rome forms
• The European Economic Community (EEC)
• The European Atomic Energy Community
• Common Market
• Abolition of internal tariff barriers was
  achieved in 1968
• Original six founding members
• Worked concurrently with ECSC

5
History of Formation contd.

• Enlargement Acceded
• 1973 United Kingdom, Denmark, and Ireland
• 1981 Greece
• 1986 Spain and Portugal

6
History of Formation contd.

• Enlargement Did Not Accede
• 1973 Norway applied accepted
• Government lost on national referendum
• 1987 Morocco and Turkey applied
• Morocco turned down not considered European
• Turkey accepted
• Received candidate status in 2000
• Began officially membership negotiations in 2004

7
History of Formation contd.

• 1992 Maastricht Treaty Signed
• 1993 European Union (EU) formed out of the old
  EEC
• Later Enlargement
• 1995 Finland, Sweden, and Austria
• 2004 Cyprus, Czech Republic, Estonia, Hungary,
  Latvia, Lithuania, Malta, Poland, Slovakia,
  Slovenia
• 2007 Romania and Bulgaria

8
EU in Economic Integration

• Preferential Trading Area
• Free Trade Area
• Customs Union
• Common Market
• European Union
• Economic and Monetary Union
• Complete Economic Integration

9
Euro

• Eurozone currency union of 16 EU states
• Adopted the euro as the sole legal tender
• Austria France Italy Portugal
• Belgium Germany Luxembourg Slovakia
• Cyprus Greece Malta Slovenia
• Finland Ireland Netherlands Spain

10
Euro contd.

• Euro used in other countries
• With Formal Agreement
• Use euro as official currency and mint coins
• Monaco
• San Marino
• Vatican
• Without Formal Agreement
• Andorra
• Montenegro
• Kosovo

11
European Central Bank

• Responsible for monetary policy covering the 16
  member states of the Eurozone
• No common representation, governance, or fiscal
  policy for the currency union

12
European Central Bank contd.

• Only one primary objective
• Maintain price stability within the Eurozone
• (inflation of below, but close to 2)
• Exclusive right to authorize the issuance of euro
  banknotes
• Member States can issue euro coins but the amount
  must be authorized by ECB

13
European Central Bank contd.

• Key tasks
• Define implement the monetary policy
• Conduct foreign exchange operations
• Take care of the foreign reserves of the European
  System of Central Banks
• Promote smooth operation of the money market
  infrastructure

14
Who Runs the European Union

• The EU is run by the European Commission
• The European commission is responsible for
• proposing legislation,
• implementing decisions,
• upholding the Unions treaties
• and the general day-to-day running of the Union.

15
Who Runs the European Commission

• The president of the European Commission is José
  Manuel Barroso
• The commission has 27 Commissioners, one for each
  member state
• President Barroso is one of the 27 commissioners
  and started his term in 2004 and is serving a
  five year term

16
The State of EU

• Commission President José Manuel Barroso has
  outlined ways for the EU to survive the economic
  crisis.
• Today we are asking EU leaders to agree on a
  comprehensive action plan. To do everything
  possible to protect our citizens from
  unemployment. To clean up financial markets on
  the basis of the de Larosière Report. And to pave
  the way for Europe to lead by example and by
  persuasion as we approach the G20 summit in
  London."

17
The Banking System

• The commission has urged the European banks to
  restore confidence to promote lending to start
  flowing again
• One of the major recommendations is to have the
  banks remove the impaired assists from the banks
  balance sheets

18
Financial regulation and supervision

• the key principles are set by the de Larosière
  Group
• The Larosiere Group is run by Jacques De
  Larosiere, who is the Chairman of the High Level
  Group on cross boarder financial supervision
• They would be responsible for the regulation of
  the EUs financial regulation and supervision
• bring forward initiatives already in the pipeline
  on hedge funds, private equity and remuneration
  structures
• Outline new supervisory framework and on issues
  including liquidity risk and excessive leverage
  further reinforcing protection for depositors and
  policy holders and effective sanctions against
  wrongdoing

19
The Real Economy

• Expect an overall GDP of 3.3 for the 2009 2010
  period
• This is attributed to the European Recovery Plan
• The goal is to build on a low carbon economy and
  with returning to sustainable public finances as
  soon as possible.
• The EU has targeted an investment of 5 billion
  euros in energy interconnections and broadband.

20
Employment

• The Unemployment rate is estimated to be 10 by
  2010
• Member states should implement measures such as
  financial support for temporary working-time
  arrangements, boosting income support for
  unemployed people, lowering non-wage costs for
  employers and boosting investment in skills and
  retraining.
• rapid approval of its proposal of 1.8 billion in
  advance payments under the European Social Fund
  is needed

21
Promoting global recovery

• The EU should make a united push to focus on
• better transparency and accountability
  appropriate regulation of all financial actors
• tackling difficulties caused by uncooperative
  jurisdictions
• boosting international supervisory cooperation
  and reforming the IMF, Financial Stability Forum
  and World Bank.

22
Concerns

• The EU has failed to consolidate and strengthen
  its political union
• They also have not taken adequate action to
  alleviate the democratic deficit
• The EU has grown to fast and has not updated its
  decision-making structure
• There is no constitution which makes even simple
  decisions tough

23
Cont

• The economic union has intensified and they have
  become enormously integrated with one another
• The EU has created a single market but in the
  process of creating this single market they did
  not create a governing system to regulate the
  market
• Because of the current economic situation this
  has become a glaring weakness

24
Cont

• Many believe the biggest problem is that the
  citizens in the EU dont understand the
  importance of the EU and dont care much about
  what the EU is doing
• Public support in many countries has soured and
  given way to people supporting there own
  countries and not the Union
• This has lead to some countries citizens to call
  for protectionism for there goods and services

25
Gideon Rachman

• A British EU skeptic who in 2001 warned of
  potential problems with the growth of the EU
• He believed people would be more loyal to their
  home lands then the Union in times of turmoil
• He believed in a crisis, nationalist instincts
  would come to the forefront
• He also expected the euro could run into trouble

26
Rachman

• Many of Rachmans insights are coming true
• The strain of the economic crisis has opened up
  divisions with in the union thus causing the EU
  to call an emergency meeting to combat
  protectionism
• Several new members of the union are facing
  banking crisis and old members of the union have
  refused to bail them out

27
Fears

• The fear is that all of the unrest will cause the
  union to start rolling back the four freedoms
  already established by the EU
• Free movement of goods
• People
• Services
• Capital
• Many fear that a restriction in any of these
  freedoms would cause panic amongst the EU members
  thus creating a more unsettled economic
  situation

28
Cont.

• The fears of the EU collapsing are legitimate but
  not likely
• The EU still provides a free and peaceful way of
  life
• It also offers the right to live and work
  anywhere in Europe the right to make a business
  deal without the government stopping you the
  right to hop on a train to Paris or a plane to
  Madrid with out being hassled at immigration
  (Rachman)

29
Conclusion

• It is up to the European Commission to hold the
  Union together
• The EU will have to fight off the panic of the
  more established nations who will fight for
  protectionism and nationalism to gain favor with
  their citizens
• If they can do this the EU stands a good chance
  to survive and learn from its past misgivings

30
Resources

• http//europa.eu/rapid/pressReleasesAction.do?refe
  renceIP/09/351formatHTMLaged0languageENgui
  Languageen
• http//ec.europa.eu/publications/booklets/eu_glanc
  e/66/en.pdf
• http//en.wikipedia.org/wiki/European_Commission
• http//en.wikipedia.org/wiki/European_Union
• http//en.wikipedia.org/wiki/Enlargement_of_the_Eu
  ropean_Union
• http//en.wikipedia.org/wiki/Eurozone
• http//en.wikipedia.org/wiki/European_Central_Bank
  
• http//www.epp-ed.eu/Press/showpr.asp?PRControlDoc
  TypeID1PRControlID8349PRContentID14494PRCont
  entLGen
• http//www.huffingtonpost.com/max-bergmann/the-eus
  -political-deficit_b_171959.html
• http//www.ft.com/cms/s/0/ca981568-075b-11de-9294-
  000077b07658.html