The European Union – History and Today

Introduction

The European Union (EU) was founded in 1958 as the European Economic Community (ECC). In 1968 it changed name to the European Community (EC) and later to the European Union in 1993.

Background

After the Second World War Western Europe faced two political and one economic threat;

  • the fear of a German retaliation and uprising (mostly a French concern),
  • the fear of the Communists and Russia (mostly an Anglosaxian concern),
  • and the fear of poverty and starvation mostly in Germany and France.

The political answer to these threats was two organizations;

  • NATO (North Atlantic Trade Organization) was formed to keep Russia out of Europe, to keep Germany’s economy down and to keep America inside European affairs,
  • and the EEC (European Economic Community), to somewhat co-operate with Germany but also to hinder her from an all too great economy.

Objective

The overall objective was peace through proper handling of Germany and Russia, disabling Germany from rebuilding an army and keeping Russia out of Europe. Also, a key part of success was prosperity through economic co-operation and cultural exchange within member countries.

Controversy

Generally speaking, there are two camps in the EU – the federalists and the confederalists, being somewhat opposites

Federalists

  • More power to Brussels through EMU (European Monetary Union with its currency – the €uro), foreign policies and other co-operation.
  • The EU should be a supranational organization, i.e. an organization which stands above national governments.

Examples of federalist countries are the Benelux, Germany, France and others.

Confederalists

  • Less power to Brussels, as economic co-operation suffices.
  • The EU should be an international organization, thus more power will remain on a national level.

Examples of confederalist countries are Sweden, the United Kingdom and Denmark.

Steps of Integration

In 1947, the Council of Europe was founded. Due to controversy, the unity became powerless. In 1948 the OEEC (the Organizations of European Economic Co-operation) was formed, mainly as a result of the Marshal Plan in the USA. Both these unions failed due to controversy between federalists and confederalists (see above).

In 1949, NATO (the North American Trade Organization) was formed. It brought European politicians together for the first time.

In 1951 the Paris Treaty (the European Coal & Steel Community, ECSC) was signed to solve issues with the struggle of federalists versus confederalists. The ECSC was a common market in coal and steel, designed to aid member countries to control production, prevent wars and increase efficiency in trade and production.

In 1958 the Treaty of Rome (and essentially the EEC) was signed and put into action. The treaty is a consitution – it describes the objectives of the EEC and regulates how it is to be governed. The Treaty of Rome merged three organizations into one – the ECSC, EEC and the European Atomic Energy Community (EAEC or Euratom).

The European Free Trade Association (EFTA) was founded in 1959 as a confederalist response to the EEC. In 1962, the CAP (Common Agricultural Policy) was signed. It granted subsidies to farmers and is still in place today. In the year 1968, the Customs Union was completed, abolishing tariffs within Europe.

Between 1973 and 1985 the integration project did not evolve in a satisfactory way due to a recession and an oil crisis. This resulted in unemployment problems and lead to increased protectionism, which eventually lead to non-tariff barriers to trade. During these years however, there was a territorial expansion. Six new members entered the union – Denmark, the United Kingdom, Ireland, Greece, Portugal and Spain.

The Single Market (1985-1992)

Definition

The general “single market” term refers to a customs union combined with the four freedoms – free movement of goods, services, labor and capital. To achieve free trade you must not only remove tariffs but also remove non-tariff barriers to trade. Decisions in the Council of Ministers (see below) at the time required unanimity to pass, thus hindering the removal of the said barriers.

Background

In 1985 however a movement to introduce a Single Market began. The background to this was the high unemployment rates, remaining at 10-15%, and the threat from the Pacific economy (USA and its trade partners).
A single market would lead to free trade which would lead to more competition – therefore lowering prices. The economic objective was that the lowered prices would lead to welfare and a more competitive Europe – the political objective was to increase integration inside Europe (again, a part of the Steps of Integration). This all made the introduction of a Single Market very important.
Thanks to the Single European Act in 1987 and its ammendation of the treaties, decisions concerning trade and the economy now only required 2/3 percentual majority. An action-plan – the White Paper – was in 1985 established to remove all non-tariff barriers to trade. The “Cassis de Dijon”-principle set and example of how future cases were to be handled; if a good or service is allowed to be sold in one country, it cannot be prohibited in another EU country.

Institutions of the EU

The Council of Ministers

The Council of Ministers is the lawmaking (legislative) body of the European Union. The decision about new laws are made in conjunction with the EU parliament. The laws (also called directives or regulations) passed in the Council are “above” the national laws passed by national parliaments. National ministers are sent from the capitols to discuss and come to agreements. Thus, this institution is the voice of the member countries.
Since the said ministers are not elected by the people, there is a democratic deficit. The said deficit is also present due to the lack of openness (transparency) in the Council, hindering the media from getting instant access to protocols and other documents.

The European Commission

The European Commission is the executive body, the government if you will, of the European Union. As it initiates proposals in the law-making process, the Commission gains a lot of power when laws are to be made. It also ensures that member countries implement the EU regulations into their own, national legislations. Loyalty costs a lot – European Commissioners are generally very well paid.

The European Parliament

The European Parliament makes new laws (regulations) together with the Council of Ministers, although it’s not as powerful as the Council itself due to the limited areas in which the Parliament makes laws.

The Court of Justice

The Court of Justice settles economic disputes between not only companies but also countries. The Court also interprets the common European Union legislation.

The European Council

The European Council hosts summit meetings with presidents and prime ministers. During these meetings main policies of the European Union are discussed as well as main issues for the future.

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