European Union European Union as an empirical model for the understanding of modern regional integration

studies

By Henok Gebremedhin Teka Ambo University

Ambo, Ethiopia

May 5, 2013

Introductory cession

Stages of Economic Integration - Theory Free Trade Area (FTA):

- removes tariffs among members = free trade- members retain own trade policies & external tariffs

Customs Union (CU): - common trade policy, common external tariffs

Common/Single Market (CM):- eliminates all barriers to factor mobility

Economic Union (EU):- harmonization of economic policies

Political Union (PU):- full political and economic integration

overview

European Union

1. Historical emergence/development 2. Structure3. Progresses, Problems and

prospects

4. EU: exception or a model

Great World’s Regional Blocs

MOTIVES FOR EUROPEAN INTEGRATION

Peace and stability and desire to keep Germany under control by its integration within Europe (Coal and steel producing regions of Alsace-Lorraine part of frequent wars between France and Germany)

Creation of a single market Economic prosperity Independence in relation to new world powers (USA/USSR) New European democratic identity as opposed to

totalitarianism and nationalism- Which motives stayed the same, which have changes and which have been achieved?

CHURCHILL’S SPEECH - ZÜRICH, 1946 “The first step in the re-creation of the European family must be a partnership between France

and Germany. In this way only can France recover the moral and cultural leadership of Europe. There can be no revival of Europe without a spiritually great France and a spiritually great Germany. The structure of the United States of Europe will be such as to make the material strength of a single State less important. Small nations will count as much as large ones and gain their honour by a contribution to the common cause.

SCHUMAN (French foreign minister)DECLARATION ,1950 “The pooling of coal and steel production should immediately provide for the setting up of

common foundations for economic development as a first step in the federation of Europe, and will change the destinies of those regions which have long been devoted to the manufacture of munitions of war, of which they have been the most constant victims.”

FOUNDING TREATIES

1951 European Coal and Steel Community (expired in 2002)- it eliminated trade barriers on coal, steel, and iron ore.

- Was concluded between 6 states France, Germany, Italy, BENELUX

1957 Treaties of Rome were signed, creating European Atomic Energy Community (EURATOM) the European Economic Community (EEC).

- Removal of all intra-European tariffs to form common market and customs union (common external tariffs)

1967: The ECSC, EURATOM, and EEC merged. And 1985: Single European Act

- Removal of all non-tariff barriers to free movement of factors of production.

1992 European Union (Treaty of Maastricht)

- Cooperation on defense, justice, and domestic policy

EU ENLARGEMENT WAVES 1951 Belgium, France, Germany,

Italy, Luxembourg, the Netherlands,(ECSC)(1957 EEC and EURATOM)

1973 Denmark, Ireland and the UK

1981 Greece 1986 Portugal and Spain 1995 Austria, Finland and

Sweden 2004 Cyprus , the Czech

Republic, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, Slovakia

2007 Bulgaria and Romania 2012 Croatia 2013 Serbia Turkey ??

Legislative Branch European Parliament (popularly elected but little

power) Council of Ministers (represents national

governments) Executive Branch

European Commission (main bureaucracy) Council of Auditors (budget) European Central Bank (monetary policy)

Judicial Branch European Court of Justice (reviews national law)

Structure of the EU

Institutions

- European Commission

- European Parliament

- Council of the EU

- Court of Justice of the European Communities

- Court of Auditors but plenty more “bodies”

- European Central Bank

- Committee of Regions

- Economic and Social Committee

IIIPOLICE AND

JUDICIALCOOPERATION IN

CRIMINAL MATTERS(PJC)

Intergovernmentalcooperations

IEUROPEAN

COMMUNITY

supranationalorganisation

ECSC (expired)EUROATOM

Area of freedom, security and justice

IICOMMON FOREIGN

ANDSECURITY POLICY

(CFSP)Intergovernmental

cooperation

EUinstitutions

EU ACCORDING TO LISBON3 PILLARS

EUROPEAN COMMUNITY(I. Pillar)

Free movement of goods, workers, services and capital

Agriculture Visas, asylum, migration transport Competition, taxation

and approximation of laws

Economic and monetary union

Employment Common commercial

policy Customs cooperation

Social policy, education, vocational traiing and youth

Culture Public health Consumer protection Trans-Euroepan networks Industry Economic and social

cohesion Research and technological

development Environment Development cooperations

Euratom

COMMON FOREIGN AND SECURITY POLICY(II pillar)

Foreign policy- E.g. preserve peace, human rights,

democracy, prevent conflicts and strengthen international security, relations with third countries

Security policy- EU security, disarmament, financial

aspects of defence, long-term security measures

POLICE AND JUDICIAL COOPERATION IN CRIMINAL MATTERS

(III pillar)

Prevention and combating of racism and xenophobia

Prevention and combating of crime, especially terrorism, trafficking in human beings, sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime

CHARACTERISTICS OF I pillar and, II and III Pillar Law

I pillar (European community)law Transfer of sovereign powers of Member States on

the Community Direct effect Supremacy of EC law

II and III pillar(CFSP &PJC) law Intergovernmental cooperation No direct effect No supremacy of EU law Weaker power of EU institutions

PERIODS OF PROGRESS AND CRISES

1950S – mid 1960s – beginning(ECSC → EEC and Euratom)

Mid 1960s – 1986 – crisis(“Empty chair crisis” 1965 → Luxembourg compromise 1966 → Single European Act 1987)

1986 – 1993 – success (Treaty of Maastrichta – creation of the EU)

1993 – 2005 – enlargement, consolidation 2005 – 2009 – consitutional/identity crisis

(failure of Constitutional Treaty after the French and Dutch referenda → Treaty of Lisbon 12 June 2008 Irish “no” )

2009 - … - Treaty of Lisbon

AFTER THE FAILURE OF THE CONSTITUTIONAL TREATY

31 December 2007 – Lisbon Treaty signed:

Elimination from the text of state-like rhetoric: flag, hymn, certain terms, such as Minister of European Law

Content, although differently organized, mostly unchanged

Old technique for amending Treaties, by amendments on amendments, used

Still, this enabled Member States to ratify the Lisbon Treaty without referenda All, but Ireland …

Circumstances across time

1960s – Peace through economics 1969 – slow implementation 1970s – economic crisis = protectionism 1980s – stagflation and low growth 1987 – Delors Commission 1990s – EU Global position under threat 2004 – Innovation/Competitive gaps 2008-9 – Lisbon? Recession? Swing to right? What

will be the new direction?

Areas of Integration in EUFully integrated issue areas

Trade policy No tariffs with EU, common tariffs with other

trading partners Collective negotiation in WTO

Competition policy Limitation on monopolies, etc.

Monetary policy Single interest rate from Central Bank Requires constraints on taxation, spending,

deficits

Mostly integrated issue areas Consumer health & safety regulations

Harmonized rules allow for economies of scale

Free movement of people Citizens of EU states can travel & work in

other EU states without visas or passports Police cooperate in tracking across borders Does not fully include UK, Ireland, or 10 new

members Some free movement suspended after

terrorist attacks on London 7/7/2005

Least integrated issue area

Foreign and security policy Ireland, Austria, Finland, Sweden are

neutral Must compete with NATO for relevance So far, mostly focused on humanitarian

intervention Division over 2003 US invasion of Iraq

Lessons to be learnt

Caveats No single explanation or theory of EU

regional integration Lessons are manifold – but must be

adapted to regional circumstances It is less about theory and more about

practise What do other regions want to achieve –

and how best to do this Regional integration is a continuous

process – not a product

Key to success

Motivation (trigger factors) Consensus on goals and objectives Leadership (political and financial) Institutions Supra-nationality Trust Sequencing Convergence of interests (esp. Economic) Legal basis (Independent Court)

Transferable lessons

Start small and grow (at right pace) Clear shared objectives Need leadership (willing to pay) Intergovernmental approach can only

take you so far Supranational or Dispute Settlement Its all about the politics (political will) Requires stakeholder participation

and support (esp. Business)

The role of business??? Business is a crucial stakeholder in regional integration

(consumer and producer). Business needs to influence the politics at national and regional

levels – can drive the process (In EU Business is an organised, active and very important stakeholder).

Challenges and opportunities of international business Creation of Single Market = Big Opportunity

- free movement of goods within EU- lower cost of doing business- market of 500m, per capita GDP $28,213

BUT

Creation of Single Market = Big Challenges- Increased competition (internal & external)- Less tariff barriers but more NTBs- Possibility of ‘fortress’ mentality (in recession) - ‘Special’ protected areas (agriculture)

Trade Creation vs. Trade Diversion

Discussion question for students

What features of EU should Africa adopt for its harmonized integration?

THE END: THANK YOU

Teka, Henok Gebremedhin Lecturer, PADM Dep’t

+251 911 183527P.O.Box 19

henokteka87@yahoo.com

Ambo UniversityAmbo EthiopiaMay 5, 2013

CIAO!!!