European Union | European Union | Enlargement Of The European Union


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Aditi Khare Aman Qureshi Ankit Jain Ankita Rajdev Ankit Hassija

The European Union (EU) is a supranational economic and political organization of 27 member states, located primarily in Europe. It was established by the Treaty of Maastricht, which was signed in February 1992 and came into force in November 1993, on the foundations of the pre-existing European Economic Community. With almost 500 million citizens, the EU combined generates an estimated 30% share (US$16.8 trillion in 2007) of the world's nominal gross world product. The European Headquarter is at Brussels, Belgium. It is being selected as the headquarters of the European Union because of its centralized location in Europe. The EU has developed a single market through a standardized system of laws which apply in all member states, guaranteeing the freedom of movement of people, goods, services and capital. It maintains a Common Trade Policy, Agricultural and Fisheries Policies, and a Regional Development Policy. Sixteen member states have adopted a common currency, the Euro

The European Union is a geo-political entity covering a large portion of the European continent. It is founded upon numerous treaties and has undergone expansions that has taken it from 6 member states to 27, a majority of states in Europe.

Its origins date back to the post-World War II era, in particular the foundation of the European Coal and Steel Community in Paris 1951, following the "Schuman declaration", or the Treaties of Rome establishing the European Economic Community. Both these bodies are now part of the European Union, which was formed under that name in 1993.

Beginnings: War and Peace: For centuries, Europe was the scene of frequent and bloody wars. In the period 1870 to 1945, France and Germany fought each other three times, with terrible loss of life. A number of European leaders became convinced that the only way to secure a lasting peace between their countries was to unite them economically and politically.

So, in 1950, in a speech inspired by Jean Monnet, the French Foreign Minister Robert Schuman proposed integrating the coal and steel industries of Western Europe. As a result, in 1951, the European Coal and Steel Community (ECSC) was set up, with six members: Belgium, West Germany, Luxembourg, France, Italy and the Netherlands. The power to take decisions about the coal and steel industry in these countries was placed in the hands of an independent, supranational body called the "High Authority". Jean Monnet was its first President.
Coal and Steel Community in 1950

The ECSC was such a success that, within a few years, these same six countries decided to go further and integrate other sectors of their economies. In 1957 they signed the Treaties of Rome, creating the European Atomic Energy Community (EURATOM) and the European Economic Community (EEC). The member states set about removing trade barriers between them and forming a "Common Market".

In 1967, the institutions of the three European communities were merged. From this point on , there was a single Commission and a single Council of Ministers as well as the European Parliament.

Originally, the members of the European Parliament were chosen by the national parliaments but in 1979 the first direct elections were held, allowing the citizens of the member states to vote for the candidate of their choice. Since then, direct elections have been held every five years.

The Treaty of Maastricht (1992) introduced new forms of co-operation between the member state governments - For example on Defense, and in the area of "Justice and Affairs". By adding this inter-governmental co-operation to the existing "Community" system, the Maastricht Treaty created the European Union (EU).

1993±2004: European Union The signing of the Maastricht Treaty which created the EU legally. On 1 November 1993, under the third Delors Commission, the Maastricht Treaty (Treaty on the European Union) became effective, creating the European Union The 1994 European elections were held resulting in the Socialist group maintaining their position as the largest party in Parliament. The Council proposed Jacques Santer as Commission President .

On 30 March 1994, accession negotiations concluded with Austria, Sweden, Finland and Norway. Norway did participate with Iceland and Liechtenstein in the European Economic Association (entered into force on 1 January 1994), which allowed European Free Trade Association states to enter the Single European Market, created in 1993.The following year, the Schengen Agreement would come into force between seven members, expanding to include nearly all others by the end of 1996. The 1990s also saw the further development of the euro. The 1 January 1994 saw the second stage of EMU begin with the establishment of the European Monetary Institute and at the break of 1999 the euro as a currency was launched and the European Central Bank was established. On 1 January 2002 notes and coins were put into circulation, replacing the old currencies entirely.

2004±Present: Recent History On the 10-13 June 2004, the 25 member states participated in the largest trans-national election in history (with the second largest democratic electorate in the world).

Green: Pre-Maastricht Blue: New countries

There are 27 member of the European Union. 1. Austria 2. Belgium 3. UK 4. Denmark 5. Germany 6. Greece 7. Ireland 8. Spain 9. Italy 10. Luxembourg 11. Netherlands 12. Portugal 13. Finland 14. France 15. Sweden 16. Cyprus 17. Czech Republic 18. Estonia 19. Hungary 20. Latvia 21. Lithuania 22. Malta 23. Poland 24. Slovakia 25. Slovenia 26. Bulgaria 27. Romania

EU members and when they Joined:

1952 1973 1981 1986 1995 2004 2007

Belgium, France, Germany, Italy, Luxembourg, Netherlands Denmark, Ireland, United Kingdom Greece Portugal, Spain Austria, Finland, Sweden Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia Bulgaria, Romania

To join the EU, a country must meet the Copenhagen criteria, defined at the 1993 Copenhagen European Council. These require a Stable Democracy which respects human rights and the rule of law; a Functioning Market Economy capable of competition within the EU; and the Acceptance of the Obligations of Membership, including EU law. Evaluation of a country's fulfillment of the criteria is the responsibility of the European Council. The current framework does not specify how a country could exit the Union (although Greenland, a Territory of Denmark, withdrew in 1985), but the proposed Treaty of Lisbon contains a formal procedure for withdrawing. Four Western European countries that have chosen not to join the EU have partly committed to the EU's economy and regulations: Iceland, Liechtenstein, and Norway are a part of the single market through the European Economic Area, and Switzerland has similar ties through bilateral treaties. The relationships of the European microstates Andorra, Monaco, San Marino, and Vatican City include the use of the euro and other co-operation.

Who has Applied to Join the European Union?
There are 13 "applicant countries". Together with their dates of application, they are: 14/4/87 3/7/90 16/7/90 31/3/94 5/4/94 22/6/95 27/6/95 Turkey Cyprus Malta Hungary Poland Romania Slovak Republic

13/10/95 24/11/95 8/12/95 14/12/95 17/1/96 10/6/96

Latvia Estonia Lithuania Bulgaria Czech Republic Slovenia

On 15April1958. The Council laid down that the official languages of the Member States should be both the official languages of the Community and the working languages of the Community institution. Every Member State's official language is an official language of the EU. As several Member States share the same official language this means there are 11 official languages. They are (in alphabetical order): Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish, Swedish.

The European Union is the world¶s biggest trader, accounting for nearly 20% of global exports and imports. The United States is the EU¶s largest trading partner, followed by China and Russia. Two-way trade flows across the Atlantic are worth close to ¼400 billion a year.

Open trade among members of the EU has led to the single European market with freedom of movement for people, goods, services and capital. The Union therefore takes a lead in pushing for further trade liberalization at world level for the benefit of rich and poor countries alike. Trade sanctions - e.g. removing trade preferences or limiting or freezing trade with a partner in breach of human rights or other international standards of behaviour - are also a tool of European foreign policy.

India ranked fourth in terms of its imports to the EU. The EU's imports from Russia and China grew by 32 percent and 23 percent respectively.

The EU recorded a deficit of 106.4 billion euro in its external trade in 2005, compared with a deficit of 62.9 billion euro in 2004.

Rules Followed to do trade:To benefit all players, trade has to be free and fair, with the same transparent and mutually-agreed rules applied to everyone. The EU firmly supports the World Trade Organisation which lays down a set of rules to help open up global trade and ensure fair treatment for all participants. The system, although imperfect, offers a degree of transparency and legal certainty in the conduct of international trade.

Free and fair The most visible way to make trade free is to reduce, or remove altogether, import duties or quotas which countries apply to products. Suppliers, whether domestic or foreign, can then compete openly on price and quality. But there are also hidden or µtechnical¶ barriers to trade whereby governments and companies try to gain an unfair advantage over others. These unfair trade practices include the following:

Selling goods on foreign markets below cost or domestic price in order, for example, to force producers in these countries out of their home market ² so called µdumping¶.


Paying subsidies from the state budget to companies, including to µnational champions¶, to give them an unfair advantage in export or domestic markets.


Reserving public contracts for local firms, even though foreign bidders submit better offers.


Disregarding intellectual property rights (trade marks and copyrights) by producing pirated or counterfeit goods which are sold cheaply to undercut the original manufacturer.

The WTO also provides a dispute settlement procedure when direct disputes arise between two or more trading partners. While the EU sometimes takes action in the WTO against its trade partners, the EU has also been on the receiving end of WTO disputes in cases involving notably its agricultural sector.

In parallel with its WTO membership, the EU has developed a network of bilateral trade agreements with individual countries and regions across the world. These agreements complement moves at the WTO to remove barriers to trade internationally and help us move more quickly to secure mutual advantage with key commercial partners. There are clear WTO rules establishing conditions for these agreements to prevent them being used to discriminate against other trade partners, and all EU agreements are compatible with these rules.

Spreading the Benefits But trade agreements are not just based around commercial interests. The EU is particularly sensitive to the interests of developing countries and has long recognised that trade can boost their economic growth and their productive capacity.

Developing countries enjoy duty-free access or cut-rate tariffs on exports to the EU market for the 7,200 products covered by the EU's generalised system of preferences (GSP). Vulnerable countries with special development needs enjoy duty free treatment for all products covered by the GSP. This is a one-way concession which does not require reciprocal action on the part of beneficiaries. The world¶s 50 least developed countries have totally free access to the EU market for all their products, except exports of arms and ammunition.

The special trade and aid relationship between the EU and the 79 countries of the AfricanCaribbean-Pacific (ACP) group dates from the Lome Agreements of 1975. This relationship is being further developed through so-called 'economic partnership agreements' (EPA). These agreements will combine EU trade and aid in a new way. The ACP countries are encouraged to foster economic integration with regional neighbours as a step towards their global integration, while more aid is focused on institution-building and good governance. Under the EPA the development dimension becomes the cornerstone of the EU-ACP relationship.



Since its origin, the EU has established a single economic market across the territory of all its members. Currently, a single currency is in use between the 16 members of the eurozone. Considered as a single economy, the EU generated an estimated nominal gross domestic product (GDP) of US$16.83 trillion in 2007, amounting to 31% of the world's total economic output, which makes it the largest economy in the world by nominal GDP and the second largest trade bloc economy in the world by PPP valuation of GDP. It is also the largest exporter of goods, the second largest importer, and the biggest trading partner to several large countries such as India, and China.

170 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU. In May 2007 unemployment in the EU stood at 7%, while investment was at 21.4% of GDP, inflation at 2.2% and public deficit at -0.9% of GDP. There is a great deal of variance for annual per capita income within individual EU states, these range from US$7,000 to US$69,000.

In European Union for trade there are trade centers for the exchange of goods and services. Exchanges may take place between two parties which is called as bilateral trade or amongst more than two parties which is called as multilateral trade. When the trade is done within European Union it is done for the exchange of goods and services and provides recognition and equal value for both the parties in business.

Since it is an era of modern economy therefore there is modern system of trade amongst the members of European Union. Here in European Union the modern traders generally negotiate through the use of a medium of exchange, i.e. money as a result one can separate buying and earning from selling. As in the European Union there is single money system which is euro therefore the trade within the European Union is of single market system. Because the European Union is growing in terms of trade therefore several objectives must be considered within the single market to reach a true political and economic community of the members of European Union.

CAPITAL MOVEMENT IN EUROPEAN UNION Capital movement in european union occurs in the following way Acquisition of Domestic Securities - It is the right to acquire stakes and to exercise the resulting voting rights under the same conditions as the domestic government.

Financial Assistance and Balance of Payments - The outstanding amount of loans to be granted to Member States under this facility is limited to ¼ 12 000 million. To assist the financial assistance there is a commission which is empowred on behalf of the European Community, to contract loans on the capital markets or with financial institutions. Again to facilitate the business there is the support made available by the European Central Bank (ECB) under the very short-term financing facility program. These activities in the European union leads to harmonisation of capital markets & increases in transparency to avoid disputes.

Payment facilities within European Union - It is basically done by three ways: 1. Cross-Border Payments: This type of payment option is to ensure that charges for payments are the same as those for payments in Euros within a member state and to put forward a common legal framework for retail payment services in the internal market.

2. Cross-Border Credit Transfers: This type of payment option is to ensure that credit transfers throughout the EU are performed rapidly and inexpensively. 3. Transfers of Funds: This type of payment option is to ensure and establish the traceability of transfer of funds which are applicable to all payment service providers. Because the main objective is to combat terrorist financing which now a days is the biggest headache for the members of European Union.

BUSINESS PERFORMANCE WITHIN EUROPEAN UNION Business performance in the European Union is done by the formation of company. The way in which a company is formed is shown. 1. Merger. 2. Formation of a holding company. 3. Formation of a joint subsidiary. 4. Conversion of a public limited company previously formed under national law. Now for the company opening there should be a minimum capital of ¼ 120 000 in the pocket of the company. And should have a registered office from where it can have its operations.

4. Handling of Accounts: This is a process to coordinate members for the content of annual accounts and annual reports. It is also for adopting the method of fair methods of accounting.

All the above actions led to a fair method of business system which has the following characteristics. All EU consumers will have the right to the same information in their country or other EU Member State. It will be easier to calculate the total cost of production. Protect consumers against taking on too much debt. FIU - FINANCIAL INTELLIGENCE UNIT

The main purpose of the financial intelligence unit is to facilitate proper trade. If there is problem in the trade or if there is a fraud in the trade it should take proper actions to solve the problem. This FIU is established in each member of the European Union.

The free movement of capital, like the three other fundamental freedoms of the EU, has enabled its Member States to achieve new levels of prosperity. The fluidity of capital has facilitated transactions amongst any individual or entity in the EU. The increased amount of cooperation forges stronger relationships amongst Member States and provides a platform to further improve agreements. EXPENDITURE

Pie Chart Showing EU Total Expenditure in Millions of Euros for 2006 Agriculture: 49,798.8 (approx 46.7%) Structural Actions: 32,399.3 (approx 30.4%) Internal Policies: 9,013.7 (approx 8.5%) External Actions: 5,186.2 (approx 4.9%) Pre-Accession Strategy: 2,276.7 (approx 2.1%) Compensations: 1,073.5 (approx 1.0%) Reserves: 1,27.6 (approx 0.1%) Total expenditure = 106,575.5 million Administration: 6,699.7 (approx 6.3%)


Pie Chart Showing EU Total Revenue (Percentage) in Millions of Euros for 2006


1. Wikipedia 2. CIA World Factbook²European Region 3. 4. 5.

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