EUROPEAN UNION

Presentation Prepared For : International Business

A BALASUBRAMANIAN ( FI 903 ) A BHAVANI ( FI 905 ) MOHAMMAD SANOOJ ( FI 912 ) S SRINIVAS REDDY ( FI 926 ) SUNEESH SUDHKARAN ( FI 929 )

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

What is European Union ?

27
Member States Combined population of 490 EU Member States million

Percent of worlds population

Percent of global GDP

30

55

Percent of combined worldwide Official Development Assistance

What is European Union ?

Shared values: liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law. Largest economic body in the world A unique institution Member States voluntarily cede national sovereignty in many areas to carry out common policies and governance. Not a super-state to replace existing states, nor just an organization for international cooperation Worlds largest & most open market for goods and commodities from developing countries.

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

History of the EU
1923: Pan-Europa Movement Pre-1945: Pre-WWII Europe Concept of an unified European State developed 1951: Treaty of Paris Created the European Coal and Steel Community 1957: Treaty of Rome Established the EEC and Eura-Com July 1967: Merger Treaty Created the European Communities

History of the EU
European Coal and Steel Community In the aftermath of World War II, the aim was to secure peace among Europes victorious and vanquished nations and bring them together as equals, cooperating within shared institutions. Based on a plan by French Foreign Minister Robert Schuman (to German Chancellor) Six Countries Belgium, the Federal Republic of Germany, Netherlands, Luxembourg, France and Italy signed a treaty to run heavy industries (coal and steel) under common management to make war not only unthinkable but Jean Monnet and other leaders with the first European ingot of steel materially impossible

History of the EU
Treaty of Rome The six founding countries expanded cooperation to other economic sectors, creating the European Economic Community (EEC) As a result, people, goods, services, and capital ay move freely across the Union Britain left out, formed EFTA instead 1960s: Common Agricultural Policy
Signing of the Treaty of Rome

History of the EU
Jan 1973: Enlargement of the European Union Jan 1981: Greece becomes a Member State 1986: Spain and Portugal join 1987: Turkey formally applies for accession 1992: Maastricht Treaty Established the European Union May 1992: Switzerland accession halted

History of the EU
Single European Act & Maastricht Treaty

Single Market by 1992 Three pillar structure (left): Euro & economic Policies, CFSP and Justice & Home Affairs Additional: extension of Qualified Majority Voting, European citizenship

History of the EU

History of the EU
Mar 1994: Accession negotiations Adds Austria, Sweden, Finland and Norway 1994: European elections 1990s: The Euro Further development of currency 2000: Treaty of Lisbon May 2004: 25 total Member States Czech Republic, Hungary, Poland, Slovakia, Estonia, Latvia, Lithuania, Slovenia, Cyprus and Malta Jan 2007: Bulgaria and Romania join EU

HISTORY OF EU

1945-1959

1960-1969

1970-1979

1980-1989

1990-1999

2000-

Peaceful The Swinging Europe The Sixties a beginnings period of of corporation economic growth

Growing The changing face A Europe Community of Europe the fall of without the first the Berlin wall frontiers Enlargement

EU : Over The decades

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

Demographics

1951 Founding Members Belgium France Germany Italy Luxembourg Netherlands

Demographics

1973

Denmark Ireland United Kingdom

Demographics
1981 Greece

1986 Portugal Spain

1995 Austria Norway Sweden

Demographics
2004 Cyprus Estonia Hungary Latvia Lithuania Malta Poland Slovakia Slovenia Czech Republic = Europe united

Demographics
2007 Bulgaria Romania
New EU Member states are required to take on the Euro once their econ. & fiscal situation permits it Convergence criteria ~ Low debt (>60% of GDP) ~ Budget deficit (>3%) ~ Low inflation ~ Stable Interest /exchange rates)

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

EU Institutions
The first institutions were created at the start of the 1950s.

Various Institutions:
~ The European Parliament ~ The European Council, ~ The Council of the European Union ~ The European Commission, ~ The Court of Justice of the European Union ~ The European Monetary Union ~ The Court of Auditors.

EU Institutions
European Parliament
Voice of Europeans (785/750) members elected across EU for 5-year terms (accord to national popululation) With the Council, passes EU laws and adopts EU budgets (co-decision rights) democratic nature and growing powers have made it one of the most powerful legislatures in the world.

EU Institutions
European Council

The European Council is the group of heads of state or government of the EU member states. It meets four times a ye to define the Union's policy agenda and give impetus to integration. The President of the European Council is the person responsible for chairing and driving forward the work of the institution, which has been described as the highest political body of the European Union.

EU Institutions
Council of the European Union
EUs main decision-making body, comprised of (9 confg of ) ministers of 27 Member States, representing Member States point of view (Ecofin, Gaerc etc) Represent their governments and are accountable to their national political systems. Council presidency rotates among Member States every six months (changes soon: EU President)

EU Institutions
European Commission
27 Commissioners, representing the European perspective, each responsible for a specific policy area. EUs executive branch proposes legislation, manages Unions day-to-day business and budget, and enforces rules The Commission is led by a President who is nominated by the European Council and approved by Parliament. The remaining 26 Commissioners are nominated by memberstates

EU Institutions
Court of Justice of European Union
Highest EU judicial authority 27 judges Ensures all EU laws are interpreted and applied correctly and uniformly. It comprises the main chamber: Court of Justice, the General Court and the Civil Service Tribunal.

EU Institutions
Economic & 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 Membe States and Institutions

EU Institutions
European Central Bank
Created keeping common currency in mind The primary objective of the ECB is to maintain price stability within the Euro-zone It has the exclusive right to authorize the issuing of euro banknotes. Member states can issue euro coins but the amount must be authorized by the ECB beforehand

EU Institutions
Court of Auditors
It ensures that taxpayer funds from the budget of the European Union have been correctly spent. The court provides an audit report for each financial year to the Council and Parliament. It is composed of one member from each state appointed by the Council every six years. Every three years one of them is elected to be the president of the court

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

Common Policies
Common Agricultural Policy Objectives Increasing agricultural production Providing certainty in food quality & quantity Ensuring reasonable prices for consumers Ensuring a high quality of life for farmers Stabilising markets

Common Policies
Common Agricultural Policy Until recently, operated by a system of subsidies and market intervention. Price controls and market interventions led to considerable overproduction, resulting in socalled butter mountains and wine lakes. Intervention stores of produce bought up by the Community to maintain minimum price levels

Common Policies
Common Agricultural Policy
Surplus often sold on the world market at prices considerably below Community guaranteed prices, or farmers were offered subsidies to export to outside community market Criticism for under-citting farmers outside europe mainly developing world overproduction has also been criticised for encouraging environmentally unfriendly intensive farming methods

Common Policies
Common Agricultural Policy
Throughout 1990s, CAP has been subject to a series of reforms

Reforms ~ set-aside, 1988 - A proportion of farm land was

deliberately withdrawn from production ~ McSharry,1992 - Milk quotas ~ De-coupling' - Dissociation of the money farmers receive from the EU ~ Fischler reforms,2004 - Limiting the amount they produce

Common Policies
Common Agricultural Policy
Agriculture expenditure will move away from subsidy payments linked to specific produce, toward direct payments based on farm size. This is intended to allow the market to dictate production levels, while maintaining agricultural income levels Abolition of the EU's sugar regime Until the 1990s, the policy accounted for over 60% of the then European Community's annual budget, and still accounts for around 35%

Common Policies
Common Fisheries Policy
Conservation of fish stocks Monitor supply and demand for fish Aid to fishing industry to cope with changing circumstances Negotiate with non-EU members on fishing issues

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

Economy

Economy
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

Economy
Agreed budget of 864.3 billion Euro 178 of top 500 largest corporation in EU Single market and custom union between the member state. Control of monetory policies by ECB Euro is the second reserve currency in the world Free circulation of goods,people,capital and currency within the EU.

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

Finance
Tax Harmonisation
Reduce differentials in tax regimes throughout the single market to aid competition and transparency

Single Market
Free movement of goods, services, labour and capital between Member states

Euro
Monitor introduction and development of Common Currency

Finance
Tax Harmonisation - Why ?
High levels of foreign direct investment in the UK, as a result of low corporate taxation and an attractive financial environment, attracted the envy of other EU member states In short, tax harmonisation offers these states the opportunity to end the UKs self-made advantage One member of the influential Ruding Committee which investigated company taxation in the EU in 1992, noted that There was no doubt in the Committee that a common currency requires at least minimum harmonisation of direct taxation

Finance
Tax Harmonisation - What ?
Harmonisation is a key tool in creating the Single Market. It involves standardising the rules for product standards, competition and law across the European Union to allow companies to trade as freely as possible within the Single Market
National governments to implement identical standards be they in product design or taxation Implies a level of common ground achieved through minimum or maximum legal requirements or through an assessment that different systems have a similar, harmonious effect on standardising income and the Single Market.

Direct tax harmonisation involves company taxation across the whole European Union

Finance
Single Market
The Single Market began at the start of 1993 with Jacques Delors (President of the European Commission) called it one of the main engines of the EU but also said: you cant fall in love with the single market Building one internal market was intended to launch Europe as an economic superpower Removal of obstacles to trade ensured companies would start economies of scale more cross-border competition would wipe out inefficient firm

Finance
Single Market - Creation
Removal of barriers to the four freedoms of movement (people, goods, services, capital) within the EU Barriers were: regulatory, technical, legal, bureaucratic, cultural and protectionist EU Directives telling member states governments to put changes into effect

Finance
Single Market - Benefits
Businesses: fair competition, economies of scale, expand to global markets Consumers: lower prices, greater choice of goods and services 2.5 m new jobs since 1993 800 billion euro extra wealth over 15 m people now go to another EU state either to work or retire

Finance
Single Market - Concerns
less than 50% of companies think the Single Market has had a positive impact on them European companies felt that the Single Market had not boosted their sales and productivity 90% of businesses think that significant barriers remain worker mobility has not increased significantly

Finance
Common Currency - Euro
Adoption of the single currency is final part of Economic and Monetary Union (EMU) Stage 1: remove barriers to free movement of capital Stage 2: European Central Bank set up Stage 3: Introduction of the euro

Goals of single currency:

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

Finance
Common Currency - Euro
Common currency for 15 of the 27 member states of the EU One of the striking benefits of a single European currency are low interest rates due to a high degree of price stability The euro is as stable and credible as the bestperforming currencies previously used in the euro area countries All cash transactions in Euros by January 2002

Finance
Benefits - Euro
Citizens
Price transparency, low interest rates encouraging investment

Political
Prominent position in the global economy, milestone step in European integration

Business
Increased competition for consumers, no exchange rate transaction costs

Global
Greater ease of international trade, Enhanced stability

Macro Economy
Price stability, low inflation

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

Regional Relations
Bridging the prosperity gap The European Union may be one of the richest parts of the world, but there are big internal disparities of income and opportunity between its regions. Through its regional policy, the EU transfers resources from affluent to poorer areas. The aim is to modernise backward regions so that they can catch up with the rest of the Union. Large differences in prosperity levels exist both between and within EU countries. The wealthiest country, Luxembourg, is more than seven times richer than Romania and Bulgaria, the poorest and newest EU members.

Regional Relations
Bridging the prosperity gap The dynamic effects of EU membership, coupled with a vigorous and targeted regional policy, can bring results. The case of Ireland is particularly heartening. Its GDP, which was 64% of the EU average when it joined in 1973, is now one of the highest in the Union. One priority of regional policy is to bring living standards in the countries which have joined the EU since 2004 up to the EU average as quickly as possible

Regional Relations

Regional Relations
The Cost Of Success The EU has used the entry of these countries to reorganise and restructure its regional spending. In the period from 2007 to 2013, regional spending will account for 36% of the EU budget. In cash terms, this represents spending over the seven years of nearly 350 billion. Objectives: Cohesion Policy. convergence, competitiveness and cooperation The 12 countries which have joined since 2004 will receive 51% of total regional spending between 2007 and 2013, although they represent less than one quarter of the total EU population.

Regional Relations
The Cost Of Success The European Regional Development Fund (ERDF) covers programmes involving general infrastructure, innovation, and investments. Money from the ERDF is available to the poorest regions across the EU. The European Social Fund (ESF) pays for vocational training projects and other kinds of employment assistance, and job-creation programmes. As with the ERDF, all EU countries are eligible for ESF assistance.

Regional Relations
The Cost Of Success The Cohesion Fund covers environmental and transport infrastructure projects as well as the development of renewable energy. Funding from this source is reserved for countries whose living standards are less than 90% of the EU average. This means the 12 recent newcomers plus Portugal and Greece. Spain, which benefited under earlier Cohesion Fund operations, is being phased out.

Regional Relations
The Cost Of Success The bulk of regional spending is reserved for regions with a GDP below 75% of the Union average to help improve their infrastructures and develop their economic and human potential. This concerns 17 of the 27 EU countries. On the other hand, all 27 are eligible for funding to support innovation and research, sustainable development, and job training in their less advanced regions. A small amount goes to cross-border and inter-regional Cooperation projects.

Regional Relations

The EU in the World

The EU is a global player. Its soft power promotes stability, prosperity, democracy and human rights, delivers concrete results in the fight to eradicate poverty, and in achieving sustainable development.

Regional Relations
Peace & Security
Works for global peace and security alongside the United States and multilateral organizations including NATO and the United Nations. Undertakes humanitarian and peacekeeping missions and has provided military forces for crisis management around the globe Taken steps to improve intelligence sharing, enhance law enforcement and judicial cooperation, curtail terrorist financing

Regional Relations
Democracy & Human Rights
Works globally for free elections and open democratic processes. Fights racism and intolerance at home and abroad Campaigns globally against capital punishment. The EU and its Member States are the worlds largest aid donor, providing 55% of total official development assistance Provides billions of dollars in humanitarian aid to more than 100 countries in response to crises and natural disasters

Regional Relations
International Trade

European Commission represents all 27 EU Member States before the World Trade Organization. Supports free trade and open markets, within the rules-based structure of the WTO, to promote growth and jobs in both industrialized and developing countries The world's most open market for products and commodities from developing countries 40% of all EU imports are from developing countries

Regional Relations
Environmental Protection
leader in global efforts to protect the environment, maintaining rigorous and comprehensive systems at home Executing a cap and trade system to reduce greenhouse gas emissions Plays a key role in developing and implementing international agreements, such as the Kyoto Protocol on Climate Change Takes the lead in the fight against global warming with the adoption of binding energy targets (cutting 20% of the EU greenhouse gas emissions by 2020 )

INDEX
1 3 4 5 6 7 8 9
Introduction

2 History
Demographics European Union Institutions Common Policies Economy Finance Regional Relations Conclusion

European Union
Advantages Transactions costs eliminated Price Transparency No Uncertainty in exchange rates Strong rival to US & JAPAN No War Increased Trade & Reduced costs Low Inflation

European Union
Disadvantages Instability of the system Loss of Sovereignty Language Barriers

Thank You