European Union Submitted By:- Avishek Singh 113 Pratik Akerkar
Agenda Brief Introduction History Member States Political and Judicial structure Economy Shortfalls MNE Implications EU and India
Introduction The EU is an unique economic and political partnership between 27 European countries that has delivered half a century of peace, stability, and prosperity, helped raise living standards, and is progressively building a single Europe- wide market in which people, goods, services, and capital move among Member States as freely as within one country. EU was initially created to foster economic cooperation and thus avoid conflict. But over the years it has evolved into an organisation spanning all areas, from development aid to environmental policy. EU has its own flag, currency i.e. EURO and anthem ―Ode to joy‖. Motto: United in diversity The EU is larger in area than all but six countries with an area of 4,423,147 sq.kms. The EU has the worlds second-longest coastline, after Canada, which is 65,993 km. No of official languages in EU – 23 ; German the most widely spoken mother tongue in EU.
History 1950s- Beginning of cooperation 9th May 1950 - Robert Schuman, French minister of Foreign Affairs, proposed that France and Federal Republic of Germany pool their coal and steel resources. 18th April 1951- Paris treaty signed between the six countries Belgium, France, Federal Republic of Germany, Italy, Luxembourg & Netherlands establishing the European Coal and Steel Community(ECSC) which came into force on 23rd July 1952. 25th March 1957- Rome treaties were signed between the six countries forming the European Economic Community (EEC) and the European Atomic Energy community(Euratom) which comes into force on 1st January 1958.
History 1960s- Period of economic growth 4th January 1960- The Stockholm Convention establishes the European Free Trade Association (EFTA), comprising of Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and UK. 8th April 1965- Merger treaty is formed merging the executive bodies of the ECSC, EEC and Euratom and thus creating a single Council and a single Commission which comes into force on 1st July 1967. 1st July 1968 - Customs duties between the member states on industrial goods are completely abolished and a common external tariff is introduced.
History 1970s- Growing community 1st January 1973- Denmark, Ireland and the United Kingdom join the European Communities, bringing their membership to nine. 10th December 1974- At the Paris Summit, the political leaders of the nine member states decide to meet three times a year as the European Council. They also give the go-ahead for direct elections to the European Parliament. 7th-10th June 1979 - The first direct elections to the 410-seat European Parliament.
History 1980s- The changing face of Europe - Fall of Berlin wall 1st January 1981- Greece joins the European Communities, bringing the number of members to 10. 14th June 1985 - The Schengen Agreement is signed with the aim of abolishing checks at the borders between member countries of the European Communities. 1st January 1986 - Spain and Portugal join the European Communities, bringing their membership to 12. 28th February 1986 - The Single European Act is signed in Luxembourg and The Hague. It comes into force on 1 July 1987. 9th November 1989 – Fall of Berlin wall.
History 1990s- Europe without frontiers 7th February 1992- The Maastricht European Council signed a Treaty on European Union, laying the foundation for a common foreign and security policy, closer cooperation on justice and home affairs and the creation of an economic and monetary union, including a single currency. It comes into force on 1st November 1993. 1st January 1993 – Single European Market comes into force. 1st January 1995 - Austria, Finland and Sweden join the EU, bringing its membership to 15. 1st January 1999 – 11 EU countries adopt the euro. The European Central Bank takes on responsibility for monetary policy. The 11 countries are joined by Greece in 2001.
History 2000s- Decade of further expansion 26th February 2001- Signing of the Treaty of Nice. It comes into force on 1 February 2003. 1st January 2002 – Euro notes and coins are introduced in the 12 euro-area countries. 1st May 2004 - Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia join the European Union, bringing its membership to 25. 1st January 2007 – Bulgaria and Romania join the European Union, bringing its membership to 27. Slovenia adopts the euro. 13th December 2007 - The 27 EU countries sign the Treaty of Lisbon, which amends the previous Treaties. 1st January 2008 - Cyprus and Malta adopt the euro. 1st January 2011 - Estonia adopts the euro as its currency, becoming the 17th member of the euro area.
Member States The European Union is composed of 27 sovereign Member States: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. Croatia is an acceding country and may become the member on 1st July,2013. There are four candidate countries: Iceland, Macedonia, Montenegro and Turkey The ‗Copenhagen criteria‘ for EU membership stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union; the ability to take on the obligations of membership including adherence to the aims of political, economic & monetary union.
Benefits of Joining EU Political United Europe– minimizes the risk of war Economical Free transfer of goods, services, people & capital Gives smaller economies the ability to negotiate with much bigger economies like US & China on an equal footing Social Higher quality of life w.r.t. safety of citizens, job, health, education, & information. Environmental Transfer of eco-friendly technologies
Political Structure The Principle of subsidiarity EU Law divided into primary & secondary legislation The treaties (primary legislation) are the basis or ground rules for all EU action Secondary legislation – which includes regulations, directives and decisions – are derived from the principles and objectives set out in the treaties Laws passed in two forms: Laws which do not require national implementation measures Laws which specifically require national implementation measures
Bicameral legislative branchof the European Union Ordinary Legislative Procedure (previously called ‗Co- decision procedure‘) European Parliament ( abbreviated as Europarl or EP) 736(soon to be 751) directly elected every five years by universal suffrage since 1979 shares equal legislative and budgetary powers with the Council The Council of European Union (also called the "Council" and sometimes referred to as the "Council of Ministers") Composed of twenty-seven national ministers (one per state) Exact membership depends upon the topic Has legislative initiative in limited sensitive areas holds, jointly with the Parliament, the budgetary power of the Union
Executive Branch European Council mentioned by the Lisbon Treaty as a body which "shall provide the Union with the necessary impetus for its development" comprises the heads of state or government of the EU member states, along with the President of the European Commission and the President of the European Council Meetings are chaired by its President and take place at least twice every six months Has no formal powers; it gathers the executive power of the member states European Commission body is responsible for proposing legislation, implementing decisions, upholding the Unions treaties and the general day-to-day running of the Union operates as a cabinet government, with 27 members of the Commission (one from each member state) Members proposed by the member states, however they are bound to act independently develop medium-term strategies; draft legislation and arbitrate in the legislative process; represent the EU in trade negotiations; make rules and regulations;
JudiciaryCourt of Justice of the European Union The Court of Justice primarily deals with cases taken by member states, the institutions, and cases referred to it by the courts of member states The General Court mainly deals with cases taken by individuals and companies directly before the EUs courts . Decisions from the General Court can be appealed to the Court of Justice but only on a point of law The European Union Civil Service Tribunal adjudicates in disputes between the European Union and its civil service
Economy– Overview GDP (figures for 2010) in PPP – $14.82 trillion real growth rate – 1.8% per capita – $ 32,000 Sector wise composition Agriculture – 1.8 % Industry – 25 % Services – 73.2 % GINI Index for 2009 – 30.4 HDI (2010) – 0.835 External Debt – $16.08 trillion (as on June 30, 2011)
Economy 26% share of the global GDP in 2010 161 corporations out of the Fortune Global 500 in 2010 headquartered in EU Two of the original core objectives of the EEC Development of single market and a customs union between its member states Ensure undistorted competition within the single market
EU27 Foreign DirectInvestment Net Outflows– Decreased from 281to107 billion euro in 2010 Net Inflows– Decreased from 216 to 54 billion euro in 2010 USA & Switzerland two largest investors into EU27 EU is the single largest investor in US accounting for almost 75% of the total FDI flowing into the US Belgium largest net investor United Kingdom largest net recipient
Monetary Union Maastricht Treaty in 1993 made the member states legally bound to start the monetary union by 1999 Euro duly launched on Jan 1, 1999 by 11 of the 15 member states – remained an accounting currency Jan 1, 2002– Euro notes & coins issued; phasing out of national currencies Euro is the sole currency of 17 EU member states today
Benefits of Euro Remove the cost of exchanging currency Differences in prices – in particular in price levels – should decrease because of the law of one price‗ Many national and corporate bonds denominated in euro are significantly more liquid and have lower interest rates than was historically the case when denominated in national currencies Strong effect on European financial integration
Shortfalls The globalization of finance Rising government debt levels Trade imbalances Monetary policy inflexibility Loss of confidence
Effect of a possible currencyconversion on MNEs Trigger contractually agreed mechanisms for termination or adaptation of the contract Exchange Rate risk for international MNEs (EURIBOR or EONIA) Dependency on a single contractual partner Following items to be considered in new contracts: Terms of the contract Liquidity and insolvency Temporary government regulations Specifics in the case of company purchases Restrictions of the free movement of goods and capital
EU Cultural Initiatives European Capitals of Culture, 2011 - Turku and Tallinn EU‘s Culture programme (2007-2013) Budget of €400 3 objectives: Promoting cross border mobility Encouraging transnational circulation of cultural & artistic output Fostering intercultural cultural dialogue 3 stands: Cultural actions European level cultural bodies Analysis and dissemination of activities European Cultural Month event, Media Plus programme, Orchestras such as the European Union Youth Orchestra European Capital of Culture programme The Treaty of Lisbon, International Olympic Committee and FIFA EU Football 4 Peace project - Israeli, Jordanian, Irish and British football
Rankings of theEU27 in theGlobalCompetitivenessIndex 2010–11- The European Union hasproposed a new strategy—Europe 2020—for smart,sustainable, and inclusive growth- Consists of consolidating publicfinances while promotingeconomic integration, investing inpan-European energy andtransport infrastructure, anddeveloping further information andcommunication technologies-Emphasis on upgrading skillsand promoting innovation
Rankings of the EU27 in theGlobalCompetitiveness Index 2010– Basic requirement11 Institutions Infrastructure Macroeconomic Environment Health and Primary Education Efficiency enhancer Higher education and Training Goods Market Efficiency Labor market Efficiency Financial market Efficiency Technological Readiness Market Size Innovation and sophistication factor Business sophistication Innovation
EU and India India – one of the fastest growing economies in the world, with a market potential of more than 1 million people Trade in goods EU goods exports to India 2010 : €34.7 billion EU goods imports from India 2010 : €33.2 billion Trade in services EU services exports to India 2010 : €9.8 billion EU services imports from India 2010 : €8.1 billion Foreign Direct Investment
EU and India 2004 – EU Strategic Partner 2005 – EU-India Joint Action Plan 2006 – negotiations for FTA as part of Global Europe Strategy 2008 – Revised Joint Action Plan Annual EU-India Summit 10th Dec, 2010 in Brussels €13.4million allocated through the Trade and Investment Development Programme (TIDP) funded from the Country Strategy Paper (CSP) 2002-2006 €470 million allocated for actions on health, education and the implementation of the Joint Action Plan through the Country Strategy Paper