The European Union Robert Harris Eric Jensen Scott Nielsen Clark Carpenter Josh Liljenquist.

The European UnionThe European Union

Robert Harris

Eric Jensen

Scott Nielsen

Clark Carpenter

Josh Liljenquist

Schuman DeclarationSchuman Declaration: 9 May : 9 May 19501950

On 9 May 1950 Robert Schuman, Minister of Foreign Affairs in the French Government, proposed to Germany that it should join on an equal footing a new body responsible for the joint management of coal and steel. The German Chancellor, Adenauer, gladly accepted: the first step towards the Union of Europe had been taken

Robert Schuman, Jean Monnet

Timeline of EventsTimeline of Events

• 1951 The European Coal and Steel Community

• 1957 The European Economic Community and the European Atomic Energy Community

• 1960 European Free Trade Association

• 1968 The European Community customs union is completed, removing all customs duties between members of the EC and establishing a common external tariff

• 1991 The European Council meets at Maastricht, The Netherlands, and agrees to the Treaty which establishes the European Union

• 2002 The euro becomes the official currency of the 12 participating countries; euro coins and bills are issued and the currencies of the 12 states cease to be legal tender

The European UnionThe European Union

• Standards of Entry

• The Euro

• Trade Statistics

• The Future of the EU

Country GDP GDP- GDP/ GDP % Inflation Exchange Unemploymentgrowth rate capita of sectors rate rate

Germany 2.184 trillion 0.40% 26,600 ag--1% 1.30% 1.13/dollar 9.80%ind--31%ser--68%

Switzerland 231 billion 2% 31,700 ag--2% 0.50% 1.667/dollar 1.90%ind--34%ser--64%

Romania 152.7 billion 4.80% 6,800 ag--15% 34.50% 35,052/dollar 9.10%ind--30%ser--55%

Poland 368.1 billion 1.20% 9,500 ag--4% 2.50% 4.01/dollar 17%ind--35%ser--61%

Comparison of EU vs. Non-EU NationsComparison of EU vs. Non-EU Nations

Euro coins have one common side, and one country specific side

Euro banknotes are identical throughout Europe

Common Side

France Italy GermanyBelgiumAustriaFinland Greece

IrelandLuxembourg

SpainHolland

Portugal

• Belgium • Germany • Greece • Spain • France • Ireland • Italy • Luxembourg • The Netherlands • Austria • Portugal • Finland

12 of the 15 European Union members have joined together to form a common currency

Denmark, Sweden, and the United Kingdom have not yet joined the Euro

The ESCB is comprised of the National Central Bank (NCB) from each country, and the European Central Bank (ECB)

These banks all working together is called the Eurosystem

The Eurosystem's primary objective is maintaining price stability. It meets its objectives through:

• Deciding and implementing monetary policy; • Conducting foreign exchange operations; and • Operating payment systems.

The NCBs of the participating Member States played a key role in the smooth transition to the euro. Their responsibilities have included:• Introducing the euro in their respective countries; • Managing the changeover from national currencies to the euro; • Creating the necessary systems to effectively circulate the euro banknotes and coins; • Withdrawing national currencies; and • Providing advice about and promoting the use of the euro

Consumer Pros

• Allows easier price comparison between countries, making it difficult for companies to charge artificially higher prices

• Travelers to not have to exchange money in traveling from one country to another in the Euro

• Through a single market, competition will rise, lowering prices across Europe

Consumer Cons

• For consumers in a country with a comparative advantage, the price of goods may rise, and since the average consumer is still more likely to purchase goods from his or her local market, they will be paying a higher price

• Not all prices will lower to an equilibrium price across Europe because many prices are based on level of taxation, and the costs of labor, transportation, and property which still differ among countries

• Since retailers will have to convert all their prices from their old currency to the new Euro currency, Some retailers will be enticed to round-up prices at the implementing of the Euro

Business Pros

• Trade among countries is stimulated due to lack of tariffs and exchange rates

• With no Exchange rate to worry about, many potential problems are eliminated such as the possible raising of an exchange rate from the time a business signs for a deal, and when the deal is completed and the money transferred

• Cross-Boarder investments will increase along with multinational mergers and acquisitions

Business Cons• Small businesses that do business only in its country end up paying a lot of money converting to the new monetary system (ie. accounting/payroll systems), but reap no benefits of the free trade since they don’t trade

E.U. Trade Statistics and E.U. Trade Statistics and Rows with the U.S.Rows with the U.S.

• The statistics are designed to give an idea of E.U. trade output and E.U. trading power.

• The trade disputes with the U.S. show some of the "rough spots" in E.U. trading history, but do not include major disputes between the E.U. and other countries.

E.U. Trade Surplus With E.U. Trade Surplus With WorldWorld

• September 2003• $10.1 Billion US

• September 2002• $10.94 Billion US

• August 2003• $8.92 Billion US

• August 2002• $10.1 Billion US

Trade and InvestmentTrade and Investment

Investment 2002 -- Billions USDEU-15 Direct Investment in the US 862.6

US Direct Investment in the EU-15 700.0

Source: US Department of Commerce

World Trade 2002 (Excluding Intra-EU Trade) - Billions USDImports % Exports %

Total 5178.4 -- 4922.1 --

EU-15 931.3 18.0 939.0 19.1US 1202.5 23.2 693.5 14.1

Source: WTO estimates

EU/US/World TradeEU/US/World Trade

EU-15 Trade 2002 - Billions USDImports % Exports %

World 938.0 -- 944.2 --US 166.1 17.7 227.9 24.1

Source: Commission (Trade DirectorateGeneral)

US Trade 2002 -- Billion USDImports % Exports %

World 1163.6 -- 693.5 --EU-15 226.1 19.4 143.8 20.7

Source: US Department of Commerce

Key 2001 StatisticsKey 2001 Statistics

Inflation Rate6 1.6 % 1.8 % 1.1 % -0.7 %(6/ 2002, harmonized index of consumer prices)Total Imports7 914.0 - 1 180.5 350.1(2001, all products, US $billions) (extra-EU)Total Exports7 872.5 - 730.9 404.7(2001, all products, US $billions) (extra-EU)World Import Share7 18.9 % - 18.3 % 5.4 %

World Export Share7 19.4 % - 11.9 % 6.6 %

EU15 US Japan

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

EU15 US Japan

Inflation Rates

Inflation Rates

Trade Area ChartTrade Area ChartREGIONAL TRADING AREAS

EU15 EFTA NAFTA MERCOSUR APEC (21) ASEAN (10)(Customs

Union)(FTA) (FTA) (Customs Union)

Area 3,1541 468 21,726 11,863 62,695 4,480(thousands km2)

Population3801 11.9 401 214 2,528 529

(millions)GDP 8.72 0.4 14.4 0.8 21.0 0.6

(US$ trillions, at current pricesand exchange rates)

EU15 Exports to Area 92.2 248.0 21.7 443.6 37.9(Goods; US$ billions)

EU15 Imports from Area 97.1 198.0 21.8 502.9 58.9(Goods; US$ billions)

US Exports to Area3 191.3 11.9 265.2 20.7 460.8 43.8(Goods; US$ billions)

US Imports from Area3 234.6 15.2 365.1 17.7 812.3 87.9(Goods; US$ billions)

Total Exports 880.0 143.8 1,119.9 92.7 2,685.6 381.3(Goods; US$ billions)

Total Imports 920.7 133.0 1,537.6 97.8 2,899.5 332.4(Goods; US$ billions)

Figures are for the year 2001 and include trade among the members except for the EU. t = total, figures formember countries added together. 1USD = 0.8956 Euro.EFTA (European Free Trade Association): Iceland, Liechtenstein, Norway, Switzerland.MERCOSUR (Southern Common Market): Argentina, Brazil, Paraguay, UruguayAPEC (Asia-Pacific Economic Cooperation): Australia, Brunei, Canada, Chile, China, Hong Kong,Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Philippines, Singapore, SouthKorea, Taiwan, Thailand, United States, Peru, Russia and Vietnam.ASEAN (Association of South East Asian Nations): Brunei, Cambodia, Indonesia, Laos, Malaysia,Myanmar, Philippines, Singapore, Thailand, Vietnam.Source: European Commission, Trade Directorate General, October 2002, with the followingexceptions:1. EU15 Area, Population: Eurostat Yearbook 2002.2. EU15 Gross Domestic Product: Eurostat. Gross Domestic Product 2001: First Results, Statistics inFocus: Economy & Finance, Theme 2 – 26/2002, August 8, 2002.3. US Exports and Imports: US Department of Commerce, International Trade Administration.

Trade Area Trade Area Comparisons(2001)Comparisons(2001)

Area (thousands km2)

31

,54

1

46

8

21

,72

6

11

,86

3

62

,69

5

4,4

80

0 10000 20000 30000 40000 50000 60000 70000

EU15 (Customs Union)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR (Customs Union)

APEC (21)

ASEAN (10)

Area (thousands km2)

Population and GDP, 2001Population and GDP, 2001

GDP (US$ trillions, at current prices and exchange rates)

8.72

0.4

14.4

0.8

21

0.60

5

10

15

20

25

EU15 (CustomsUnion)

EFTA (FTA) NAFTA (FTA) MERCOSUR(Customs

Union)

APEC (21) ASEAN (10)

Population (millions)

EU15 (Customs Union)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR (CustomsUnion)

APEC (21)

ASEAN (10)

Import Comparisons, 2001Import Comparisons, 2001

EU15 Imports from Area (Goods; US$ billions)

97.1

198

21.8

502.9

58.9

EU15 (Customs Union)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR (Customs Union)

APEC (21)

ASEAN (10)

US Imports from Area (Goods; US$ billions)

234.6

15.2

365.1

17.7

812.3

87.9

EU15 (CustomsUnion)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR(Customs Union)

APEC (21)

ASEAN (10)

Export Comparisons, 2001Export Comparisons, 2001

EU15 Exports to Area (Goods; US$ billions)

92.2

248

21.7

443.6

37.9

EU15 (Customs Union)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR (Customs Union)

APEC (21)

ASEAN (10)

US Exports to Area (Goods; US$ billions)

191.3

11.9

265.2

20.7

460.8

43.8

EU15 (Customs Union)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR (Customs Union)

APEC (21)

ASEAN (10)

Totals, 2001Totals, 2001

Total Imports (Goods; US$ billions)

920.7

133

1,537.60

97.8

2,899.50

332.4

EU15 (Customs Union)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR (Customs Union)

APEC (21)

ASEAN (10)

Total Exports (Goods; US$ billions)

880

143.8

1,119.90

92.7

2,685.60

381.3

EU15 (Customs Union)

EFTA (FTA)

NAFTA (FTA)

MERCOSUR (Customs Union)

APEC (21)

ASEAN (10)

E.U. disputes with U.S.E.U. disputes with U.S.Steel Tariffs

The E.U. takes issue with tariffs imposed by President Bush in March 2002 on certainforeign steel products.

The administration is hesitant to remove the tariffs --- initially designed to shield thedomestic industry from foreign competition as it underwent a reorganization --- becauseit could hurt Bush’s popularity in Midwestern states that are key to winning the 2004election.

“If Europe retaliates, a lot of U.S. exporters are going to be upset because they are goingto see tariffs on everything from textiles from North Carolina to oranges from Florida,”--Dan Ikenson, a trade policy analyst at the Cato Institute in Washington

Tax Dispute

The “foreign sales corporations” system lets companies with a foreign presence, such asChicago-based Boeing Co. and Microsoft Corp., exempt between 15 percent and 30percent of their export income from U.S. taxes.

By doing that, the prices of their goods are lowered and more competitive than foreignrivals’. Last year, the WTO ruled that it constituted an illegal subsidy.

The tax break, coupled with a second benefit not challenged by the EU, is expected tosave U.S. companies an estimated $4.8 billion this year.

U.S. disputes with E.U.U.S. disputes with E.U.Bananas

The EU’s executive Commission put forward a package of measures modifying theimport regime.

The new rules replace an EU system implemented in 1993 that gave preferentialtreatment to bananas grown in former European colonies in the Caribbean and Africa.

Cincinnati-based Chiquita Brands International Inc. contended the system cost it billionsin lost European sales, since most of its bananas come from plantations in CentralAmerica.

Beef Hormones

The WTO ruled in 1998 that the EU had no specific scientific evidence to justify a ban inplace since 1989 on beef from cattle receiving growth hormones. It allowed the UnitedStates to impose about $125 million worth of tariffs each year on EU products.

But EU officials said in mid-October they have new studies to prove the dangers ofhormones, and the United States should lift its penalties. They say they’ll take theirevidence to the WTO.

U.S. disputes with EU U.S. disputes with EU (cont’d)(cont’d)

Genetically Modified Foods

The US, Canada and Argentina yesterday demanded a World Trade Organisation panel torule on their challenge to the European Union’s restrictions on imports of geneticallymodified crops, sparking a fierce reaction from Brussels.

Washington and its allies contend that the EU’s 1998 de facto moratorium on approvalsof biotech foods is illegal because it is not based on scientific evidence of risk to healthand the environment.

They are also contesting outright bans by six EU member states on some alreadyapproved genetically modified organisms (GMOs).

In addition, the EU last month adopted strict labeling and traceability rules for GMOsthat will require them to be segregated from non-biotech crops, a requirement US farmerssay will be hugely costly to implement. Brussels says the new rules are needed to helprestore consumer confidence in GM foods.

Several studies by scientific experts have concluded that the GM foods currently on themarket are safe to eat, but that new foods should be rigorously tested.

The EU claims its new rules are in line with recommendations for risk-testing GMOsadopted by the Codex Alimentarius, the United Nations food safety body, which requirestricter procedures than those in the US.

Benefits of EnlargementBenefits of Enlargement

• “Enlargement is one of the most important opportunities for the European Union at the beginning of the 21st century. It is a unique, historic task to further the integration of the continent by peaceful means, extending a zone of stability and prosperity to new members.

Benefits of EnlargementBenefits of Enlargement

• Third countries will significantly benefit from an enlarged union– Single set of trade rules– Single tariff– Single set of administrative procedure.

This will simplify dealings for third-country operators within Europe and improve conditions for investment and trade.

Benefits of EnlargementBenefits of Enlargement

• Political

• Economic

• Cultural

PoliticalPolitical

• The extension of the zone of peace, stability, and prosperity in Europe will enhance the security of all peoples.

EconomicEconomic

• The addition of more than 100 million people, in rapidly growing economies, to the EU’s market of 370 million will boost economic growth and create jobs in both old and new member states

• There will be a better quality of life for citizens throughout Europe.

Cultural Cultural

• The arrival of new members will enrich the EU through increased cultural diversity, interchange of ideas, and better understanding of other peoples.

Other BenefitsOther Benefits

• Enlargement will strengthen the Union’s role in world affairs– Foreign and security policy– Trade policy– Global governance

Benefits of EnlargementBenefits of Enlargement

• Other benefits are already visible– Stable democracies– Increased respect for minorities– Economic growth– Growing trade (€ 17 Billion trade surplus in

2000)– Higher employment

Costs of Non-EnlargementCosts of Non-Enlargement

• Lower economic growth

• Weaken the incentive for economic reform.

• Create political instability

• Less able to combat problems

• Disillusion

The European UnionThe European Union

“The Europeans will be saved if they are aware of their solidarity in the face of a common danger ... the current fears will be the immediate cause of European unification, but not its raison d'être. Depending on the circumstances surrounding its creation, Europe will be more or less complete. Will it ever be complete? No-one can say. This is not a reason for delaying the effort to achieve unification. Action is better than resignation and the desire for perfection is a poor excuse for inaction.”

-Robert Schuman