Topical Issues in European Economic Policy. Student Workbook

Transcription

1 Topical Issues in European Economic Policy Student Workbook by Zsuzsanna Bacsi January 2008 Contents: I - EUROPEAN VALUES (2) II - WHY THE EUROPEAN UNION? (2) III - TRUE OR FALSE? STATEMENTS ABOUT THE EU (4) IV - TEN HISTORIC STEPS TO THE EU (7) V - HOW DOES THE UNION WORK (10) VI. - ENLARGEMENT (16) VII - ECONOMIC PERFORMANCE, COMMON POLICIES (17) VIII BUDGET (20) IX - THE SINGLE MARKET (22) X - THE ECONOMIC AND MONETARY UNION (25) XI - THE STABILITY AND GROWTH PACT (27) XII - BUILDING FOR THE FUTURE, INVESTING IN PEOPLE (28) XIII - CHARTS (29) XIV - ENLARGEMENT AND EU IN THE WORLD (30) XV - RURAL DEVELOPMENT FOR (32) XVI - BOOSTING PRODUCTIVITY AND CREATING BETTER JOBS (34) XVII - FOR AND AGAINST (38) XVIII - TURKEY AND THE EU (49) 1

2 I - EUROPEAN VALUES Reading: Panorama of the European Union, United in Diversity, excerpt. Write a short essay (2-3 pages) about: What does the European Union mean for me? - Advantages, disadvantages for my everyday life, - European values I accept or deny European Commission Directorate General for Press and Communication Manuscript completed in January 2005 United in diversity Panorama of the European Union The European Union (EU) is a family of democratic European countries, committed to working together for peace and prosperity. It is not a State intended to replace existing States, nor is it just an organisation for international cooperation. The EU is, in fact, unique. Its member states have set up common institutions to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at European level. The historical roots of the European Union lie in the Second World War. The idea was born because Europeans were determined to prevent such killing and destruction ever happening again. In the early years, the cooperation was between six countries and mainly about trade and the economy. Now the EU embraces 25 countries and 450 million people, and it deals with a wide range of issues of direct importance for our everyday life. Europe is a continent with many different traditions and languages, but also with shared values such as democracy, freedom and social justice. The EU defends these values. It fosters cooperation among the peoples of Europe, promoting unity while preserving diversity and ensuring that decisions are taken as close as possible to the citizens. In the increasingly interdependent world of the 21st century, it is more necessary than ever for every European citizen to work together with people from other countries in a spirit of curiosity, openness and solidarity II - WHY THE EUROPEAN UNION? Read the Peace and Stability section under the 'Why the European Union' section of the document Europe in 12 Lessons (see below). This section talks about why the European Union was necessary in the aftermath of World War I and World War II. Discuss the following questions. 2

3 1. Who were the former enemies in Europe? 2. Explain the raw materials of war turned into instruments of peace 3. What problems does the EU face regarding safety and security? 4. Explain the EU accounts for an ever smaller percentage of the world s population 5. Check the paragraph Economic and social solidarity and find out information that should be updated! 6. What does the expression economies of scale mean? 7. Why must free competition be counterbalanced by Europe-wide solidarity? 8. How would you demonstrate the truth of the statements: standards of living have risen steadily there are still gaps between the rich and the poor 9. What kind of social problems does the EU have to tackle? 10. Write a short paragraph (10-15 lines) on the importance of the EU on the world stage the European model of society 11. Explain: strength in unity, harmonious yoking of tradition and progress the whole is greater than the sum of its parts 12. Give a few examples of the common heritage of values. 13. How could you explain subsidiarity, and why is it important? European Commission, Directorate-General for Communication Manuscript completed in October 2006 Europe in 12 lessons by Pascal Fontaine, former assistant to Jean Monnet and Professor at the Institut d Études Politiques, Paris.1. Why the European Union? Europe s mission in the 21st century is to: provide peace, prosperity and stability for its peoples; overcome the divisions on the continent; ensure that its people can live in safety; promote balanced economic and social development; meet the challenges of globalisation and preserve the diversity of the peoples of Europe; uphold the values that Europeans share, such as sustainable development and a sound environment, respect for human rights and the social market economy. 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. 3

4 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 III - TRUE OR FALSE? STATEMENTS ABOUT THE EU Read the sections II to V in Europe in 12 lessons - 1. Why the European union? (see below) Do you agree with the following statements? Explain your opinion in a few sentences. 1. the EU accounts for an ever smaller percentage of the world s population 2. standards of living have risen steadily 3. there are still gaps between the rich and the poor 4. free competition must be counterbalanced by Europe-wide solidarity 5. the whole is greater than the sum of its parts 6. The countries of the EU have a common heritage of values. (give examples) European Commission, Directorate-General for Communication Manuscript completed in October 2006 Europe in 12 lessons by Pascal Fontaine, former assistant to Jean Monnet and Professor at the Institut d Études Politiques, Paris.1. Why the European Union? II. Bringing Europe together again The European Union encouraged German unification after the fall of the Berlin Wall in 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. 4

5 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. 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 5

6 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. 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 diversity one 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 IV - TEN HISTORIC STEPS TO THE EU 1. Read Ten Historic Steps in Europe in 12 Lessons. 2. Fill int he blank column in the table below, taking notes of the most important features (dates, participants, events.) on each of the ten steps. 3. Select what you believe were the three most important events in the development and enlargement of the EU and explain your selections. 4. Consider the future growth and development of the European Union and try to predict the next ten events that will be added to this list. What do you think about Muslim countries, the continued addition of Eastern Bloc countries and the possibility of the Union growing to be too large to be manageable? 7

8 8

9 Europe in 12 lessons.2. Ten historic steps 1951: The European Coal and Steel Community is established by the six founding members 1957: The Treaty of Rome establishes a common market 1973: The Community expands to nine member states and develops its common policies 1979: The first direct elections to the European Parliament 1981: The first Mediterranean enlargement 1993: Completion of the single market 1993: The Treaty of Maastricht establishes the European Union 1995 : The EU expands to 15 members 2002: Euro notes and coins are introduced 2004: Ten more countries join the Union 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 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 At the same time, new social and environmental policies were implemented, and the European Regional Development Fund (ERDF) was established in 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 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 This ambitious goal was enshrined in the Single European Act, which was signed in February 1986 and came into force on 1 July The political shape of Europe was dramatically changed when the Berlin Wall fell in This led to the unification of Germany in October 1990 and the coming of democracy to 9

10 the countries of central and eastern Europe as they broke away from Soviet control. The Soviet Union itself ceased to exist in December 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 The Treaty came into force on 1 November By adding areas of intergovernmental cooperation to existing integrated Community structures, the Treaty created the European Union (EU). 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 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 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 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 V - HOW DOES THE UNION WORK Read the text in Europe in 12 lessons, Read the paragraphs on the Parliament and the Council (p 19-25) 1. Prepare a short presentation on the Parliament 10

11 the Council Explain their roles, importance, composition Compare the importance of these two institutions in the operations of the EU. Prepare arguments for a discussion. 2. Check the tables about the composition of the Parliament and the Council. Correct the data in the tables, considering the recent progress, using the relevant web pages of the European institutions. Europe in 12 lessons.4. How does the EU work? The Council of Ministers of the European Union, which represents the member states, is the EU s main decision-taking body. When it meets at Heads of State or Government level, it becomes the European Council whose role is to provide the EU with political impetus on key issues. The European Parliament, which represents the people, shares legislative and budgetary power with the Council of the European Union. The European Commission, which represents the common interest of the EU, is the main executive body. It has the right to propose legislation and ensures that EU policies are properly implemented. I. The decision-making triangle The European Union is more than just a confederation of countries, but it is not a federal state. It is, in fact, a new type of structure that does not fall into any traditional legal category. Its political system is historically unique and has been constantly evolving over more than 50 years. The Treaties (known as primary legislation), are the basis for a large body of secondary legislation which has a direct impact on the daily lives of EU citizens. The secondary legislation consists mainly of regulations, directives and recommendations adopted by the EU institutions. These laws, along with EU policies in general, are the result of decisions taken by the institutional triangle made up of the Council (representing national governments), the European Parliament (representing the people) and the European Commission (a body independent of EU governments that upholds the collective European interest). (a) The Council of the European Union and the European Council The Council of the European Union (also known as the Council of Ministers) is the EU s main decision-making body. The EU member states take it in turns to hold the Council Presidency for a six-month period. Every Council meeting is attended by one minister from each EU country. Which ministers attend a meeting depends on which topic is on the agenda: foreign affairs, agriculture, industry, transport, the environment, etc. The Council has legislative power, which it shares with the European Parliament under the codecision procedure. In addition to this, the Council and the Parliament share equal responsibility for adopting the EU budget. The Council also concludes international agreements that have been negotiated by the Commission. According to the Treaties, the Council has to take its decisions either by a simple majority vote, a qualified majority vote or unanimously, depending on the subject to be decided. 11

12 The Council has to agree unanimously on important questions such as amending the Treaties, launching a new common policy or allowing a new country to join the Union. In most other cases, qualified majority voting is used. This means that a Council decision is adopted if a specified minimum number of votes are cast in its favour. The number of votes allocated to each EU country roughly reflects the size of its population. Number of votes for each country in the Council Germany, France, Italy and the United Kingdom 29 Spain and Poland 27 Romania 14 Netherlands 13 Belgium, Czech Republic, Greece, Hungary and Portugal 12 Austria, Bulgaria and Sweden 10 Denmark, Ireland, Lithuania, Slovakia and Finland 7 Estonia, Cyprus, Latvia, Luxembourg and Slovenia 4 Malta 3 Total: 345 A minimum of 255 votes out of 345 (73.9 %) is required to reach a qualified majority. In addition: a majority of member states (in some cases two thirds) must approve the decision, and any member state may ask for confirmation that the votes cast in favour represent at least 62 % of the EU s total population The European Council meets, in principle, four times a year. It is chaired by the president or prime minister of the country holding the presidency of the Council of the European Union at the time. The President of the European Commission attends as a full member. Under the Treaty of Maastricht, the European Council officially became an initiator of the Union s major policies and was empowered to settle difficult issues on which ministers meeting in the Council of the European Union fail to agree. The European Council also deals with pressing international issues through the common foreign and security policy (CFSP), which is intended to allow the EU to speak with one voice on diplomatic questions. (b) The European Parliament The European Parliament is the elected body that represents the EU s citizens. It exercises political supervision over the EU s activities and takes part in the legislative process. Since 1979, members of the European Parliament (MEPs) have been directly elected, by universal suffrage, every five years. Number of seats in the European Parliament per country Austria 18 Belgium 24 Bulgaria 18 12

13 Cyprus 6 Czech Republic 24 Denmark 14 Estonia 6 Finland 14 France 78 Germany 99 Greece 24 Hungary 24 Ireland 13 Italy 78 Latvia 9 Lithuania 13 Luxembourg 6 Malta 5 Netherlands 27 Poland 54 Portugal 24 Romania 35 Slovakia 14 Slovenia 7 Spain 54 Sweden 19 United Kingdom 78 Total 785 The political groups in the European Parliament European People s Party (Christian Democrats) and European Democrats 278 Socialist Group 219 Alliance of Liberals and Democrats for Europe 103 Greens/European Free Alliance 42 European United Left Nordic Green Left 41 Union for Europe of the Nations 30 Independence/Democracy 28 Non-attached members and temporarily empty seats 44 Total 785 Situation in October The European Parliament normally holds its plenary sessions in Strasbourg and any additional sessions in Brussels. It has 20 committees which do the preparatory work for plenary sessions, and a number of political groups that usually meet in Brussels. The General Secretariat is based in Luxembourg and Brussels. The Parliament takes part in the legislative work of the EU at three levels: Under the cooperation procedure, introduced by the Single European Act in 1987, the European Parliament can give its opinion on draft directives and regulations proposed by the 13

14 European Commission, which is asked to amend its proposals to take account of Parliament s position. Since 1987, there has also been the assent procedure, under which the European Parliament must give its assent to international agreements negotiated by the Commission and to any proposed enlargement of the European Union. The 1992 Treaty of Maastricht introduced the co-decision procedure, which puts the Parliament on an equal footing with the Council when legislating on a whole series of important issues including the free movement of workers, the internal market, education, research, the environment, trans-european networks, health, culture, consumer protection, etc. The European Parliament has the power to throw out proposed legislation in these fields if an absolute majority of members of Parliament vote against the Council s common position. The Treaty has made provision for a conciliation procedure. The European Parliament also shares, with the Council, equal responsibility for adopting the EU budget. The Parliament can reject the proposed budget, and it has already done so on several occasions. When this happens, the entire budget procedure has to be re-started. The European Commission proposes the draft budget, which is then debated by the Council and the European Parliament. Parliament has made full use of its budgetary powers to influence EU policymaking. Last but not least, the European Parliament exercises democratic supervision over the Union. It has the power to dismiss the Commission by adopting a motion of censure. This requires a twothirds majority. It also supervises the day-to-day management of EU policies by putting oral and written questions to the Commission and the Council. Finally, the President of the European Council reports to the Parliament on the decisions taken by the Council. (c) The European Commission The Commission is the third part of the institutional triangle that manages and runs the European Union. Its members are appointed for a five-year term by agreement between the member states, subject to approval by the European Parliament. The Commission is answerable to the Parliament, and the entire Commission has to resign if the Parliament passes a motion of censure against it. Since 2004, the Commission has been made up of one Commissioner from each member state The Commission enjoys a substantial degree of independence in exercising its powers. Its job is to uphold the common interest, which means that it must not take instructions from any national EU government. As Guardian of the Treaties, it has to ensure that the regulations and directives adopted by the Council and Parliament are being implemented in the member states. If they are not, the Commission can take the offending party to the Court of Justice to oblige it to comply with EU law. As the EU s executive arm, the Commission implements the decisions taken by the Council in areas such as the common agricultural policy. It has wide powers to manage the EU s common policies, such as research and technology, overseas aid, regional development, etc. It also manages the budget for these policies. The Commission is assisted by a civil service made up of 36 directorates-general (DGs) and services, which are mainly based in Brussels and Luxembourg. 14

15 15

16 Qualified majority voting In some particularly sensitive areas such as common foreign and security policy, taxation, asylum and immigration policy, Council decisions have to be unanimous. In other words, each member state has the power of veto in these areas. On most issues, however, the Council takes decisions by qualified majority voting. A qualified majority is reached: if a majority of member states (in some cases a two-thirds majority) approve; and if a minimum of 255 votes is cast in favour which is 73.9% of the total. In addition, a member state may ask for confirmation that the votes in favour represent at least 62% of the total population of the Union. If this is found not to be the case, the decision will not be adopted VI - ENLARGEMENT Read the text in Europe in 12 lessons, 1. Explain the importance of the accession criteria. 2. Explain the reasons for the successive Eastern enlargements 3. Explain the difficulties the EU faces with the enlargements Europe in 12 lessons.3. Enlargement and neighbourhood policy The European Union is open to any European country that fulfils the democratic, political and economic criteria for membership. Following several enlargements, the EU has increased from six to 27 members. Several other countries are candidates to join. Each treaty admitting a new member requires the unanimous approval of all member states. In addition, in advance of each new enlargement, the EU will assess its capacity to absorb the new member(s) and the ability of its institutions to continue to function properly. The successive enlargements have strengthened democracy, made Europe more secure and increased its potential for trade and economic growth. I. Uniting a continent (a) A union of 25 When it met in Copenhagen in December 2002, the European Council took one of the most momentous steps in the history of European integration. By inviting 10 more countries to join the EU on 1 May 2004, the European Union was not simply increasing its geographical size and population; it was putting an end to the split in our continent which, from 1945 onwards, had separated the free world from the communist bloc. 16

17 This fifth enlargement of the EU had a political and moral dimension. It enabled countries Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia which are as European as the others, not just geographically but also in terms of culture, history and aspirations, to join the democratic European family. They are now partners in the momentous project conceived by the EU s founding fathers. (b) Further enlargement Bulgaria and Romania became candidates in The process took longer for these two countries than for the other 10, but they joined the EU on 1 January 2007, bringing the number of EU countries to 27. (c) Candidates for membership Turkey, a member of NATO, with a long-standing association agreement with the EU, applied for membership in Its geographical location and political history made the EU hesitate for a long time before replying positively to its application. However, in October 2005, the European Council opened accession negotiations with Turkey. At the same time, it entered into negotiations with Croatia, another candidate country. No date has yet been set for the entry into force of any future accession treaty for these two countries at the end of the membership negotiations. (d) The western Balkans These countries, most of which were once part of Yugoslavia, are turning to the European Union to speed up their economic reconstruction, improve their mutual relations, which have been scarred by ethnic and religious wars, and consolidate their democratic institutions. The EU gave status as candidate country to the former Yugoslav Republic of Macedonia (FYROM) in November Other potential candidates include Albania, Bosnia and Herzegovina, Montenegro and Serbia. II. Membership conditions (a) Legal requirements European integration has always been a political and economic process that is open to all European countries prepared to sign up to the founding treaties and take on board the full body of EU law. According to Article 237 of the Treaty of Rome any European state may apply to become a member of the Community. Article F of the Maastricht Treaty adds that the member states shall have systems of government [ ] founded on the principles of democracy. (b) The Copenhagen criteria In 1993, following requests from the former communist countries to join the Union, the European Council laid down three criteria they should fulfil so as to become members. By the time they join, new members must have: stable institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; a functioning market economy and the capacity to cope with competitive pressure and market forces within the Union; the ability to take on the obligations of membership, including support for the aims of the Union. They must have a public administration capable of applying and managing EU laws in practice. (c) The accession process 17

18 The entry negotiations are carried out between each candidate country and the European Commission which represents the EU. Once these are concluded, the decision to allow a new country to join the EU must be taken unanimously by the existing member states meeting in the Council. The European Parliament must give its assent through a positive vote by an absolute majority of its members. All accession treaties must then be ratified by the member states and the candidate countries in accordance with each country s own constitutional procedures. During the years of negotiation, candidate countries receive EU aid so as to make it easier for them to catch up economically. For the enlargement of the 10 countries in 2004, this involved a package of 41 billion aimed mainly at funding structural projects to allow the newcomers to fulfil the obligations of membership VII - ECONOMIC PERFORMANCE, COMMON POLICIES Read the text in Europe in 12 lessons 1. List the main policies of the EU. What are the most important supported activities? 2. What activities do you consider less important, and what activities should be supported instead? Europe in 12 lessons.5. What does the EU do? The European Union acts in a wide range of policy areas economic, social, regulatory and financial where its action is beneficial to the member states. These include: o solidarity policies (also known as cohesion policies) in regional, agricultural and social affairs; o innovation policies, which bring state-of-the-art technologies to fields such as environmental protection, research and development (R & D) and energy. The Union funds these policies through an annual budget of more than 120 billion, which is largely paid for by the member states. It represents a small proportion of the EU s collective wealth (a maximum of 1.24 % of the combined gross national income of all member states). I. Solidarity policies The main purpose of the solidarity policies is to support the completion of the single market (see Chapter 6, The single market ), and to correct any imbalances by means of structural measures to help regions lagging behind or industrial sectors encountering difficulties. The need for solidarity between EU countries and between regions became even more acute following the recent entry of 12 newcomers with incomes well below the EU average. The EU must also play its part in helping to restructure sectors of the economy which have been badly affected by fastgrowing international competition. (a) Regional aid The EU s regional policy is based on transfers of funds from rich to poor countries. The money is used to boost development in regions lagging behind, to rejuvenate industrial regions in decline, 18

19 to help young people and the long-term unemployed find work, to modernise farming and to help less-favoured rural areas. The funds earmarked for regional activities in the budget are targeted at three objectives. Convergence. The aim here is to help the least-developed countries and regions catch up more quickly with the EU average by improving conditions for growth and employment. This is done by investing in physical and human capital, innovation, the knowledge society, adaptation to change, the environment and administrative efficiency. Regional competitiveness and employment. The objective is to increase the competitiveness, employment levels and attractiveness of regions other than the leastdeveloped ones. The way to make this happen is to anticipate economic and social changes and promote innovation, entrepreneurship, environmental protection, accessibility, adaptability and the development of inclusive job markets. European territorial cooperation. The aim of this new objective is to increase crossborder, transnational and interregional cooperation. It aims to promote joint solutions to problems that are shared by neighbouring authorities in sectors such as urban, rural and coastal development, the cultivation of economic relations, and networking between small and medium-sized enterprises (SMEs). These objectives will be financed by specific EU funds, which will top up or stimulate investment by the private sector and by national and regional government. These funds are known as the Structural Funds and the Cohesion Fund. The European Regional Development Fund (ERDF) is the first Structural Fund and provides funding to strengthen economic, social and territorial cohesion by reducing differences between regions and supporting the structural development and adjustment of regional economies, including the redevelopment of declining industrial regions. The European Social Fund (ESF), the second Structural Fund, provides funding for vocational training and job-creation initiatives. In addition to the Structural Funds, there is a Cohesion Fund, which is used to finance transport infrastructure and environmental projects in EU countries whose GDP per capita is lower than 90 % of the EU average. (b) The common agricultural policy (CAP) The aims of the CAP, as set out in the original Treaty of Rome from 1957, have largely been achieved: a fair standard of living has been ensured for the farming community; markets have been stabilised; supplies reach consumers at reasonable prices; farming infrastructure has been modernised. Other principles adopted over the course of time have also worked well. Consumers enjoy security of supply and the prices of agricultural products are kept stable, protected from fluctuations on the world market. The European Agricultural Guidance and Guarantee Fund (EAGGF) is the name of the budget for the CAP. However, the CAP has been a victim of its own success. Production grew far faster than consumption, placing a heavy burden on the EU budget. In order to resolve this problem, agriculture policy had to be redefined. This reform is beginning to show results. Production has been curbed. Farmers are being encouraged to use sustainable farming practices that safeguard the environment, preserve the countryside and contribute to improving food quality and safety. The new role of the farming community is to ensure a certain amount of economic activity in every rural area and to protect the diversity of Europe s countryside. This diversity and the recognition of a rural way of life people living in harmony with the land are an important part of Europe s identity. 19

20 The European Union wants the World Trade Organisation (WTO) to put more emphasis on food quality, the precautionary principle and animal welfare. The European Union has also begun reforming its fisheries policy. The aim here is to reduce the overcapacity in fishing fleets, to preserve fish stocks and to provide financial assistance to allow fishing communities to develop other economic activities. (c) The social dimension The aim of the EU s social policy is to correct the most glaring inequalities in European society. The European Social Fund (ESF) was established in 1961 to promote job creation and help workers move from one type of work and/or one geographical area to another. Financial aid is not the only way in which the EU seeks to improve social conditions in Europe. Aid alone could never solve all the problems caused by economic recession or by regional underdevelopment. The dynamic effects of growth must, above all, encourage social progress. This goes hand in hand with legislation that guarantees a solid set of minimum rights. Some of these rights are enshrined in the Treaties, e.g. the right of women and men to equal pay for equal work. Others are set out in directives concerning the protection of workers (health and safety at work) and essential safety standards. In 1991, the Maastricht European Council adopted the Community Charter of Basic Social Rights, setting out the rights that all workers in the EU should enjoy: free movement; fair pay; improved working conditions; social protection; the right to form associations and to undertake collective bargaining; the right to vocational training; equal treatment of women and men; worker information, consultation and participation; health protection and safety at the workplace; protection for children, the elderly and the disabled. At Amsterdam in June 1997, this Charter became an integral part of the Treaty and is now applicable in all the member states VIII THE BUDGET Watch the presentation on the Budget of the EU, or read the text below. 1. List the main components of the EU budget: what items can you mention as revenues, and what are the main items of expenditure? 2. How could the EU expand its resources? Where should the money be spent? Sum up your ideas in 10 lines. III. Paying for Europe: the EU budget To fund its policies, the European Union has an annual budget of more than 120 billion. This budget is financed by what is called the EU s own resources, which cannot exceed an amount equivalent to 1.24 % of the total gross national income of all the member states. These resources are mainly drawn from: customs duties on products imported from outside the EU, including farm levies; a percentage of the value-added tax applied to goods and services throughout the EU; contributions from the member states in line with their respective wealth. Each annual budget is part of a seven-year budget cycle known as the financial perspective. The financial perspectives are drawn up by the European Commission and require unanimous 20

21 approval from the member states and negotiation and agreement with the European Parliament. Under the financial perspective, the total budget for this period is billion. EU expenditure % 43% 44% 6% 6% Sustainable growth and employment 44 % Preservation and management of natural resources 43 % Citizenship, freedom, security and justice 1 % The EU as a global player 6 % Other expenditure, including administration 6 % Long-term trend in the EU s budget Long term budgetary trend 160, % Budget ceiling (euro) 140, , ,000 80,000 60,000 40,000 20, % 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Budget ceiling (% of national wealth - GNI) Budget ceiling (euro) Budget ceiling (% of national wealth GNI) Read the text below and answer the questions IX - THE SINGLE MARKET Questions: Is economic integration complete in the EU? - What are the implications/consequences of the free movement of services on : education, qualifications, employment, etc. - Why is it more attractive for entrepreneurs to set up their own businesses in the USA than in the EU? Are there physical, technical or other barriers in the way of goods, people, services? - How could we overcome these barriers? 21

22 .6. The single market The single market is one of the European Union s greatest achievements. Restrictions between member countries on trade and free competition have gradually been eliminated, with the result that standards of living have increased. The single market has not yet become a single economic area. Some sectors of the economy (public services) are still subject to national laws. The individual EU countries still largely have the responsibility for taxation and social welfare. The single market is supported by a number of related policies put in place by the EU over the years. They help ensure that market liberalisation benefits as many businesses and consumers as possible. I. Achieving the 1993 objective (a) The limits of the common market The 1957 Treaty establishing the European Economic Community made it possible to abolish customs barriers within the Community and establish a common customs tariff to be applied to goods from non-eec countries. This objective was achieved on 1 July However, customs duties are only one aspect of protectionist barriers to cross-border trade. In the 1970s, other trade barriers hampered the complete achievement of the common market. Technical norms, health and safety standards, national regulations on the right to practise certain professions and exchange controls all restricted the free movement of people, goods and capital. (b) The 1993 objective In June 1985, the Commission, under its then President, Jacques Delors, published a White Paper seeking to abolish, within seven years, all physical, technical and tax-related barriers to free movement within the Community. The aim was to stimulate industrial and commercial expansion within a large, unified economic area on a scale with the American market. The enabling instrument for the single market was the Single European Act, which came into force in July Its provisions included: extending the powers of the Community in some policy areas (social policy, research, environment); gradually establishing the single market over a period up to the end of 1992, by means of a vast legislative programme involving the adoption of hundreds of directives and regulations; making more frequent use of majority voting in the Council of Ministers. II. How the single market looks today (a) Physical barriers All border controls within the EU on goods have been abolished, together with customs controls on people. Random spot checks by police (part of the fight against crime and drugs) still take place when necessary. The Schengen Agreement, which was signed in June 1985 by nine of the then 12 member states (the United Kingdom, Denmark and Ireland did not sign), governs police cooperation and a common asylum and immigration policy, so as to make it possible to completely abolish checks 22

23 on persons at the EU s internal borders (see Chapter 10: Freedom, security and justice ). The countries which joined in 2004 are gradually coming into line with the rules of the Schengen area. (b) Technical barriers For the majority of products, EU countries have adopted the principle of mutual recognition of national rules. Any product legally manufactured and sold in one member state must be allowed to be placed on the market in all others. It has been possible to liberalise the services sector thanks to mutual recognition or coordination of national rules concerning access to or practice of certain professions (law, medicine, tourism, banking, insurance, etc.). Nevertheless, freedom of movement for persons is far from complete. Obstacles still hinder people from moving to another EU country or doing certain types of work there. Action has been taken to improve worker mobility, and particularly to ensure that educational diplomas and job qualifications (for plumbers, carpenters, etc.) obtained in one EU country are recognised in all the others. The opening of national services markets has brought down the price of national telephone calls to a fraction of what they were 10 years ago. Helped by new technology, the Internet is being increasingly used for telephone calls. Competitive pressure has led to significant falls in the price of budget airfares in Europe. (c) Tax barriers Tax barriers have been reduced through the partial alignment of national VAT rates. Taxation of investment income was the subject of an agreement between the member states and some other countries (including Switzerland) which came into force in July (d) Public contracts Regardless of whether they are awarded by national, regional or local authorities, public contracts are now open to bidders from anywhere in the EU as a result of directives covering services, supplies and works in many sectors, including water, energy and telecommunications. III. Work in progress (a) Financial services The EU s action plan to create an integrated market for financial services by 2005 has been completed. This cuts the cost of borrowing for businesses and consumers, and will offer savers a wider range of investment products savings plans and pension schemes which they will be able to obtain from the European provider of their choice. Bank charges for cross-border payments have been reduced. (b) Administrative and technical barriers to free movement EU countries are often still reluctant to accept each other s standards and norms or, on occasion, to recognise the equivalence of professional qualifications. The fragmented nature of national tax systems also hinders market integration and efficiency. (c) Piracy and counterfeiting Protection is required to prevent piracy and counterfeiting of EU products. The European Commission estimates that these crimes cost the EU thousands of jobs each year. This is why the Commission and national governments are working on extending copyright and patent protection. 23