EUROPEAN UNION
(EU)
FORMATION OF EUROPEAN UNION
May 10, 2004: European countries had engaged in a number of battles among themselves over
the last 200 years especially the eruption of Second World War which caused millions of lives and
huge destruction of the national assets. With the ending of the Second World War, a consensus is
raised among the Europeans to avoid war and restore peace permanently in Europe. As a result,
the League of Nation and ultimately United Nation emerged to maintain permanent peace.
Moreover, French Foreign Minister Robert Schuman in his speech on May 9, 1950, declared
about European integration in order to avoid war as well as to enhance regional business
activities through economic cooperation. The declaration of Schuman was regarded as the first
step towards achieving a united Europe. As a result, six European countries such as Luxembourg,
France, Belgium, Germany, Italy and the Netherlands created the European Coal and Steel
Community (ECSC) in 1952 by pooling their coal and steel resources in a common market. The
ECSC laid the foundation of today’s European Union (EU) which is consisted of 25 members
currently. The existing members are: Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, The Netherlands, United Kingdom,
Cyprus, Estonia, Hungary, Latvia, Lithuania, Czech Republic, Estonia, Hungary,Poland, Slovakia
Another two European countries like Bulgaria and Romania will join EU in 2007. The joining of
Turkey in EU is still under consideration by EU.
Indeed 10 countries from 16 to 25 listed above have joined on May 1, 2004. As soon as the new
10 countries have merged with EU, their average tariff and quota levels have reduced to EU
levels, will facilitate most of the Asian exporting economies especially China to enter their market.
Indeed China is aggressively trying to enter to these newly joined economies by exporting
products and making investment.
BENEFITS FROM THE EUROPEAN UNION
• Greater voice in the World arena.
• Sharing knowledge
• Cheap labour from Eastern Europe can help in reducing the cost of production.
• Creation of the United States of Europe, that is a federal type of state dreamt by Victor
Hugo
• Permanent peace in Europe
CHALLENGES IN EUROPEAN UNION
August 19, 2004: A number of challenges EU is facing today in its formation. Some of the major
challenges are described below:
Fiscal policy
As per treaty, Euro member country shall have to make a budget less than 3 percent of GDP. This
treaty is not favorable for those countries that has high rate of unemployment and low economic
growth.
EU Enlargement
n May 1, 2004, 10 new countries have joined EU mostly from Eastern Europe. They are Cyprus,
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. As a
result, the number of members has increased from 15 to 25 supporting nearly half billion
population. These communist countries endowed with cheap but skilled labor. Many companies
from existing 15 members are migrating to these new 10 member countries in search of cheap
manpower. As a result labor in existing 15 members are losing job to new communist members.
Common defense and foreign policy
The EU has been trying to make a common defense and foreign policy but repeatedly failing to do
so as the member countries are divided in many issues especially in the question of the status of
the United States
Knowledge based economy
As per Lisbon strategy, the EU would become the most competitive knowledge based economy in
the world by 2010 and would catch up the US economy by that time. This goal might not be
achieved as the gap between the USA and EU is increasing specially on the Iraq issue. Moreover,
the sluggish growth rate and huge unemployment in EU are working as hindrance towards
achieving knowledge based economy by 2010.
European parliamentary election
European Parliamentary election takes place every five years since 1979 and the power of the
European parliament is ever increasing with the signing of new treaties among the EU nations.
The laws made in European Parliament are to be followed in member states resulting in depletion
of national sovereignty. So it is believed that members of the European parliament seem to be
more powerful than national parliament.
Although the power of the European parliament has increased considerably over time, voter turn
out in European parliament election is declining steadily since 1979. Statistic shows that overall
turnout figure was 63 percent in 1979 while it was only 49 percent in 1999. The figure has
squeezed further in 2004 European parliament election. Less than 45 percent of 350 million voters
from the 25 member states have voted in 2004 election for nominating 732 members in
parliament - the lowest turnout since 1979 election. In addition to that ‘euro- skeptic parties’ at EU
level have gained more seats than ever before. The poor participation in casting vote and surge in
euro skepticism have raised questions about the future of European integration. There may have
been few reasons stated below why the EU citizens did not turnout for casting their votes for
European parliament.
• A significant number of EU citizens are reluctant to surrender their national sovereignty to
European Union common authority.
• The EU has been divided into two groups in the foreign policy question especially on Iraq war
issue. One is welcoming United States while the other would like to comply with the United
Nation convention that forbidden Iraq war.
• Widespread income inequality among EU citizens as well as nations has discouraged the
voters.
• EU citizens may not have forgotten the memories of the antagonistic relation that existed in
the past within EU nations.
• Over dominance of the European Commission on the member nations.
Large member size
The EU now consists of 25 member states after adding additional 10 new countries joined on 1st
May 2004. It is expected that another three countries will be joining EU namely Romania, Bulgaria
and Hungary in 2007 resulting in the largest economic, social and political association. In terms of
number it is increasing while there is increasingly increasing different opinions in EU due to large
member size. Now it is to see whether EU can sustain in the long run with its various opinions.
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