The European Union: The History and Structure

Summary

The European Union is an economic and political union of countries in the European continent. It currently has 27 member states but this number is predicted to further rise in the future due to the increased number of countries applying for membership. The body was officially formed in 1993 but it had been in existence for quite a while under a different name. After the carnage that had been unleashed on Europe during the Second World War, most European economies were struggling to rebuild from the ashes. Around the 1950s, Germany which had been on the receiving end of the Allied bombs, was rebuilding its steel industry with the help of America and Britain.

France was concerned that this industrial might (Germany) would find its footing and unleash its military might on them again. Therefore, a body was formed to allay these fears and it was called the European Coal and Steel Community. Germany and France were later joined by Holland, Belgium, Italy and Luxembourg; making these six nations the original founders of the European Union. These six nation members later renamed their body as the European Economic Community under the Treaty of Rome in 1957.

History

The European Economic Community was mostly concerned with improving trade amongst its six members. Trade barriers were removed by cutting tariffs and removing quotas. This newly established free market enabled free movement of workers and goods. Border checks were eliminated and companies grew beyond their national borders. It was also during these times that the notion of a single currency system was mentioned. The European Economic Community later came to be known as the European Union in December 1991 and their major agenda was to lay the groundwork for a single currency system. This uniform currency, the Euro was eventually introduced on 1st January 1999 and by this time, the number of member states had increased to 15.

Today, the European Union bloc has a population that is close to 500 million. Its members can move freely across Europe, without having to worry about the various borders. The single market system that was envisioned by the original six members has been established and this body is the source of 30% of the gross world product, and this is about 18 trillion US dollars; as of 2008. With the unified market system and common currency, it is quite clear that the major role of the European Union is improving trade amongst its member states. Some analysts have also argued that the driving force behind its recent expansion plans is to counter the American dominance in the world economy, and more recently the likes of China and India. Talks of “European Armed Forces” have also been heard but the idea has been quickly quashed.

The member states believe that such a requirement is already catered for under the NATO umbrella. Besides, massive cultural differences still exist amongst the member states and most of them want to maintain their own independent armed forces; a reasonable stand considering Europe has been through two World Wars. When it comes to dictating foreign policy, the member states are still far from united. This was seen in 2003 when France and Germany fell out with the United States during the invasion of Iraq while other members like Britain and Poland sided with America. However, the likes of Germany, France, Italy and Britain are well represented in the UN, G8 and WTO and the positions they take usually favor other European Union members.

Structure of the EU

When it comes to electing its leaders, the European Union adopts a unique governance system. There is the European Commission whose mandate is to iron out the various trade agreements. The five largest countries appoint 2 members to the Commission while the other countries can only appoint one member. The headquarters of the European Commission is in Brussels. Then there is the European Parliament which is the main legislative body and also has veto powers in specific areas.

Each member country is allowed to elect its members to the European Parliament. The council of ministers is supposed to implement legislation proposed by the European Commission and it’s made up of civil servants from the respective countries. The European Central Bank is charged with all the monetary policies governing the euro. It is supposed to maintain stable prices for commodities and regulate the foreign exchange operations to ensure that the foreign reserves in the eurozone are adequate. Such has been the strength of the euro that it has been used by central banks around the world as a reserve currency; joining the US dollar and Japanese yen.

International Relations

As explained earlier, the major reason the EU was formed was to improve trade amongst its members. With the new combined population that the EU has plus the minimal trade barriers, the EU has become an attractive marketplace that has opened new doors when it comes to international trade. Relations with the US, China and Japan have nowadays adopted a more economically biased foundation which is a stark contrast to the yesteryears when politics played a major part when it came to foreign relations.

United States

Europe has always enjoyed a cordial relationship with the United States even before the formation of the European Union. Even before the body was formed, America had always advocated for a unified European body especially during the height of the cold war when the Soviet Union was expanding its tentacles across Europe. With the collapse of the Soviet Union, economic issues and trade came to the forefront. A unified European body would be beneficial to American companies trading in Europe due to the reduction in trade barriers across the countries. Also, the various member states could easily gain access to the lucrative American consumer market if they were under the umbrella of the EU. Today, auto companies like Ford sell over 154 million cars across Europe, Microsoft is raking in huge profits in Europe and Coca-Cola serves 209 million European customers daily.

The recent merger between the NYSE and Euronext also serves as an indicator of improving economic relations. The European Union has certainly improved the glamour of Europe as a premier business market outside the United States. European companies have also been successful in their forages in the American market. In the auto industry, European cars were winning favor amongst American consumers due to their quality. The best example was the purchase of Chrysler by Daimler-Benz in the 1990s.

Even though economic benefits can be regarded as the best sign of improved relations between the EU and the US, it’s usually the unified political viewpoints they share and more specifically their foreign policies that come to the forefront. Democratic rights and freedom of speech are the hallmarks of American democracy but most countries that weren’t “saintly” have been forced to walk this talk in order to secure membership into the European Union.

Furthermore, these European countries have also dictated this foreign policy to other countries around the world. Another example of the close relations the EU and US share is the Kyoto protocol. While most countries in Europe are calling for the reduction in carbon emissions, their voices haven’t been strong enough and this could be due to the half-hearted responses coming out of the US camp. Maybe the European Union realizes that it will favor them economically if they are on the same page with the United States.

China

When it comes to the likes of China, the booming economy in the People’s Republic has opened a new frontier when it comes to economic partnerships. Even though China’s human rights record has been subject to massive debate, the European companies moving their factories to China beg to differ. Initially, it seemed like it was only Britain that employed a strong stance against China when it came to its foreign policy. The tensions were heightened during the conflict on the Korean peninsula and the arms race that characterized the cold war. When you look at the current EU, the likes of Germany, France and Italy have also been critical of China especially when it comes to Tibet and North Korea.

Such political views do sometimes seem insignificant when you look at the volume of trade taking place between the two continents. Besides the arms embargo that the EU has imposed on China, the other trade relations can be described as “frosty”. In 2006, China ordered 150 Airbus planes, a deal which was quite lucrative to the European company. The investment opportunities that have opened up in China’s booming economy have been snapped up by European companies, most of which are in the EU bloke.

The low labor costs being provided by China have led to a situation where cheap imports have been flooding the EU market and this has angered some quarters. However, there have been some “formal” investment plans by Chinese companies in the EU like the purchase of MG Rover, a British auto company. Despite the political upheavals that come to characterize the relations between the two parties, the EU is China’s largest trading partner and China is the EU’s second-largest trading partner, behind the United States.

Japan

The European countries used to have long-standing bilateral trade relations with Japan before the formation of the EU. This relationship goes as far back as 1970 when Japanese companies started investing directly in Europe. This relationship did have hostilities with many European companies criticizing Japan’s trade practices. The trade volume between Japan and Europe increased to about $18 billion in 1990 and this further strained the relations with many Europeans believing that the trade was lopsided and it favored the Japanese.

Industrial products, more specifically electronics, from Japan were flooding Europe but European products were finding the Japanese market inaccessible due to the high tariffs and quotas. When the EU was formed, Japan initially feared that it would lose its trade dominance in Europe due to the frosty relations that existed. However, when the Japanese economic “burble” collapsed in the early1990s, the pacific nation began to open up its borders to international trade with other nations. Towards the end of the 20th century, trade between Japan and the EU continued improving and the current trade relations are focused on removing the trade barriers.