Trading Blocks: The European Union Bartu and Gabriele.

Trading Blocks:The European Union

Bartu and Gabriele

What is the EU, origins and development

• Economic and Political Union• 28 member states

• Numerous institutions• Schengen Area (1995)• Eurozone (2002)

What is the EU, origins and development

• Last major amendment to the constitutional basis of the EU – Treaty of Lisbon

• Latest Figures • 7.3% of world population• 23% of world’s GDP (2012)

The EU’s Aim:

• Free movement of• People• Goods• Services• Capital

Which countries benefit from the EU

• Copenhagen criteria to join

Copenhagen criteria

• Democracy• The rule of law• Human rights• Respect for and protection of minorities• The existence of a functioning market

economy• The capacity to cope with competitive

pressure and market forces within the Union

EU and the Single Market

• Economic and Monetary Union (EMU)• 17 members (Eurozone)• Single currency (Euro)• Free circulation of goods, capital, people,

services• Common external tariff on all imports

Why have a monetary union?

• Easier travel (citizens, goods, services)• No exchange rate issues• More price stability• Political symbol of unity

EU and Competition

• European Commission = competition regulator• Aim: Undistorted competition within the single

market Antitrust issues Approving mergers Breaking up cartels Economic liberalisation Preventing unfair state subsidies

EU and Agriculture

• Common Agricultural Policy (1962) Increasing production High quality of life for farmers Stabilising food markets Reasonable prices for consumers

Issues with the CAP

• Price control mechanisms Excess of supply Purchase of stock by EU

• Dumping of stock outside EU Damages international competitors

Overproduction due to subsidies Environmental damage (farming)

EU’s Achievements

• Peace and stability in Europe• Economic freedom (single market)• Unified security and justice systems• Common tariff policy• Common agricultural policy (CAP)• Environmental regulations

EU’s Setbacks

• Increased bureaucracy• Less national identity (culture)• Economic cost to members• Inefficient policies (agricultural over-supply)• Migration-related issues (employment)• Problems with the Euro

Uniform interest rates (ECB) Limits fiscal policy Countries cannot devaluate Economic crisis harms all