EU Presentation

International Experience:

The European Union

Presented by:

Pre-1945: Pre-WWII Europe Concept of an unified European State developed

1923: Pan-Europa Movement

1951: Treaty of Paris Created the European Coal and Steel Community

1957: Treaty of Rome Established the EEC and Euratom

History of the EU

History of the EU

July 1967: Merger Treaty Created the European Communities

Jan 1973: Enlargement of the European Union

Jan 1981: Greece becomes a Member State

Jan 1986: Spain and Portugal join

History of the EU

1987: Turkey formally applies for accession

1992: Maastricht Treaty Established the European Union

May 1992: Switzerland accession halted

Mar 1994: Accession negotiations Adds Austria, Sweden, Finland and Norway

History of the EU

1994: European elections

1990s: The Euro Further development of currency

2000: Treaty of Lisbon

May 2004: 25 total Member StatesCzech Republic, Hungary, Poland, Slovakia, Estonia,Latvia, Lithuania, Slovenia, Cyprus and Malta

Jan 2007: Bulgaria and Romania join EU

EU Entry Requirements• Treaty of Maastricht

– Set geographic criteria

• Copenhagen Criteria– Political– Economic– Legislative

• Framework for candidate negotiations– Specific conditions– EU “absorption capacity”

The EU Mission• Not in the Constitution• Outlines where European level

action is needed• 9 Points

Mission Statement1. Guarantees peace, freedom & security in

and around Europe 2. Promotes & protects democracy and

universal rights in Europe and around the world

3. Strengthens Europe's economy, promoting solidarity by working with national, regional and local government

Mission Statement (cont’d)

4. Makes it easy for Europe's citizens to live and work throughout the Union

5. Promotes equality and tolerance of diversity

6. Promotes and facilitates cooperation between Europeans

Mission Statement (cont’d)

7. Protects Europe's environment 8. Ensures that Europe's voice is heard in

the world 9. Listen to citizens, becoming

accountable and working for them in a transparent and decentralized way

EU Political System• The EU decision making process and co-decision

procedure involves:– European Parliament– Council of the European Union– European Commission

EU Political System (cont’d)

• EU President• EU Commission• EU Parliament• European Court of

Justice• EU Directives

Advantages of the EU

• Vary country to country• Prevent war• Trade growth and reduced

transaction costs• Greater employment

opportunities• Structural funds

– Regional ERDF– Single National Program

Disadvantages of The EU• Expansion threatens internal

strength• Farming subsidies• Language Barriers

Economy of the European Union

• General Background– GDP: 14.96 trillion*– Labor Force: 224.6 million*– Largest exporter of goods– Second largest importer of goods

• Main goals:– Strengthen trade position– Bolster political and economic power

• Operates under a competition policy

*2008 statistics

Currency: Euro• Goals of single currency:

– Build a single financial market– Represent a political symbol of integration– Bring more jobs and prosperity to Europeans

• The euro area– Member States using the euro– Criteria for adoption– Who is already in the euro area?– European Central Bank

• All cash transactions in euros by January 2002

Economic and Monetary Union (EMU)

• Founded in 1957 • Purposes

– Better functioning economy– Improving prosperity and job market

• Framework for cooperation on monetary and economic policy

• All EU countries are members of the EMU– Responsibilities divided between Member States and

Institutions

Economic and Monetary Union (cont’d)

• 3 stages coordinating economic policy– Stage 1: Abolished capital movement restrictions

between Member States (1990-1994)– Stage 2: EMI and ECB established (1994-1999)– Stage 3: Exchange rates fixed (1999- )

Benefits of the Euro• Business

– Increased competition for consumers, no exchange rate transaction costs

• Citizens– Price transparency, low interest rates encouraging investment

• Macroeconomy– Price stability, low inflation

• Political– Prominent position in the global economy, milestone step in

European integration• Global

– Greater ease of international trade, enhanced stability

EU Budget 2009

Source: European Commission Online

Current State of EU Economy

Source: Bloomberg News, Feb 2009

International Relations: Globalization

• New members coming from less developed economies – Healthy State finances– Expected to provide above average growth

• Reduced transportation and communication costs – Facilitating global trade

• Population growth and opening of economies– Supply of cheap labor

International Relations: Service Centers

• Growing importance of shared service centers– Especially for US firms

• Tend to be located in EU member states with particularly favorable taxation

Relationship with the United States

• Mature economic relationship – Massive two-way trade – Extensive investment relationship

• Beneficial developments in EU: – Increase in the Euro Zone in January 2008

• Addition of Cyprus and Malta • 15 countries currently using the Euro

– Framework for Advancing Transatlantic Economic Integration

• Signed at 2007 US-EU Summit

Selling Products in the EU• Franchising

– Franchise market is quite robust

– Friendly to franchise systems in general

– Laws governing the operation of franchises

• Fairly broad • Generally do not constrain non-

member businesses

Export presentation by country

Selling Products in the EU (cont’d)

• Direct Marketing– Affected by wide range of EU legislation– Focus on clarity and completeness of consumer

information and customer data• Direct Marketing Over the Internet

– The E-commerce Directive imposes requirements• E-commerce Directive

– Promotional offers must not mislead customers in easily accessible and clear terms

– Marketing e-mails must be identified as such to the recipient

– Companies targeting customers online must regularly consult national opt-out registers list

Selling Products in the EU (cont’d)

• Distance Selling– EU’s Directive on distance selling – Number of obligations for companies doing business at a

distance• Direct marketers

– Must provide clear information before a contract is concluded

• Their identity• Identity of suppliers• Prices including delivery costs• Period for which an offer remains

Leading Sectors for US Exports• Agricultural Sector

– Fourth largest US export market– Trade balance favors EU– Main US products imported

• Tree nuts• Soybeans• Seafood• Tobacco

– High value consumer-oriented food product

Leading Sectors for US Exports (cont’d)

• FY2007 agriculture stats– US/EU bilateral trade: $27.1 billion– Agricultural trade balance

• EU: $16.7 billion• US: $10.4 billion

– US exports: Up 11%• US soybean exports: up 87%

Leading Sectors for US Export (cont’d)

• Trends in EU Agriculture– Demand for greater convenience– More openness to non traditional foods– Growing interest in health foods

• Organics• Water• Niche markets

Leading Sectors for US Export (cont’d)

• Commercial Sector– US high end technology

• Demand for quality & performance• Less focus on price

– EU market is differentiated by Member States

• Supply• Distribution• Demand• Culture• Legal characteristics

Differentiated EU Market• Each Member State merits individual attention• US Embassy Country Commercial Guide

– Provides “Best Practices” by Country

• Showcase Europe– Gives perspective on European market– Organized around leading commercial sectors

EU Openness to Foreign Investment

• One of the most hospitable climates for US business• EU Treaty Article 43

– Member States must provide “national treatment” to other Member States

– Creates “four freedoms” for movement• Capital• Labor• Goods• persons

Conclusions• Unification promoted global business

– Common currency facilitates trade– Market environment aids US foreign investment

• Current economic situation harder to manage