Disadvantages of Eu Enlargement

THE IMPACT OF THE E.U. UPON THE WIDER WORLD ECONOMY

Regional Economic Integration

The History of the E.U.

1951 – European Coal and Steel community France, West Germany, Ital, Belgium, Netherlands and Luxembourg

1957 – European Economic Community Customs Union

1979 – First democratic elections of EP 1985 – Schengen Agreement

Open borders, no passport controls 1993- Maastrict Treaty

Common Market Co-operation of foreign policy, home affairs

Adoption of EU as a name 2002- 12 members adopted single currency

Became Economic Monetary Union Now 15

As of early 2008 – 27 member states

Regional Economic Integration and E.U.

1967 – Customs Union Common tariffs externally Internal tariffs abolished

1993 – Common Market No non-tariff barriers

Labour, capital

2002 – Economic & Monetary Union Common currency between members adopting Euro Common monetary policies/aims Political associations

The E.U. and the World Economy

EU major entity in World Economics

Represented as one in WTOContains large trading countries (UK, France

etc)Claims of E.U. acting as a ‘club’ due to free

trade between member countries.Trade Diversion exists

For example

E.U. (2006, GDP PPP) U.S.A. (2006, GDP PPP)

$13.06 billion $13.543 billion

E.U. and the World Economy - Disadvantages

Trade Diversion E.g.) New Zealand big exporter of agricultural

products UK big importer of NZ’s exports When E.U. established – UK chose to import

agricultural products from France due to lower import costs No trade barriers, tariffs etc

New Zealand loses out as their goods still have export tariffs making them un-competitive.

Disadvantages (2)

Isolationist in natureNot promotion of free trade/international co-

operation Possible political/non-economic effects

The EU and US combined account for roughly half of the World’s economy Two large trading blocs will have differences in

opinion (policy).

Advantages of the E.U. on World Trade

Member countries are better able to grow economically Increased demand for imports from outside E.U. than

previously

Due to no tariff barriers, members of the E.U. can trade in the products that the are most efficient at producing. This also lowers goods prices for non-members who

want to import these products

Arguments for enlargement of the EU

Immigration helps drive economic growth.

E.U. will be able to work with member states to lower crime/trafficking

Encourages competition on a global scale

Resource mobility

…effects of the E.U.

In 2005, the 10 countries joining in 2004 received about €4billion more from the E.U. budget

In 2006, Bulgaria and Romania received €1.5billion in aid from the E.U.

Common Agricultural Policy

Accounts for 44% of E.U.’s budget (in 2005)

Guarantees a minimum price to E.U. producers

Imposes import quotas/tariffs on imports from non-member countries

…CAP (2)

Source: BBC News (2005)

Conclusion/Future of the E.U.

Enlargement of the E.U.?

Croatia/Yugoslavia are official candidates

More states joining single currency Complete EMU