The European union website however was a little more bias with more of a summary, rather than short definition. This is shown overleaf:
“The European Union is based on the rule of law and democracy. It is neither a new State replacing existing ones nor is it comparable to other international organisations. Its Member States delegate sovereignty to common institutions representing the interests of the Union as a whole on questions of joint interest. All decisions and procedures are derived from the basic treaties ratified by the Member States.”
After the Second World War the economic condition of Europe was very poor. Many western politicians realised that the condition of Europe was due to unwise political decisions that were made at the end of the First World War, such as the penalising of Germany for loosing the war. This led to Germany being politically isolated and gave fascists the chance to get support, and therefore power. This consequently led to Second World War. A group of politicians had a vision of cooperation and a united peaceful Europe. This vision then lead to the creation of the European Union.
The first step to the formation of the EU was the creation of the European coal and steel community (ECSC) in 1952. This was done by France, Germany, Italy, Luxembourg, Belgium and the Netherlands. Thus creating a free trade area for coal and steel, which were very important industries at the time. This free trade allowed the six countries to protect their industries from competition from the United States of America.
Then in 1957, the European Atomic Energy Community was formed by the same six countries. They did this to try to encourage the growth of the peaceful use of nuclear power.
In 1957, the signing of the treaty of Rome took place and created a number of institutions. These include, The European commission, The European Council of Ministers, The European Parliament and The European Court of Justice. The signing of the treaty of Rome also created a range of common policies. The first being implemented was The Common Agricultural Policy (CAP). This policy had five main objectives, to increase agricultural productivity to ensure a fair standard of living for farmers, to stabilise markets, to guarantee available of supplies, to ensure fair prices for consumers. It was hoped that CAP would be able to achieve the objectives by regulating the agricultural industry within the EU.
There were other policies introduced, which include competition policy, this influenced the degree of competition in individual markets. Regional policy was used to reduce to reduce the difference between incomes and wealth between member countries of the EU. Transport policy was difficult to implement, as governments didn’t want to pass on the responsibility and power on to the public, over transport issues. Social policy had an aim to create a single market for labour, where all workers were covered by the same EU laws.
In 1958, on 1 January the European Economic Community (EEC) was created. This community withdrew all tariffs between the six countries. Not only did it allow the free flow of goods, but also of labour and capital, between the six countries.
Later in 1979 the European Monetary System was established and aimed towards a single currency. This policy had a difficult aim, as many barriers still remained between countries, although some had been removed. For example the French government would only purchase computers from a French manufacturer. Whilst the UK only bought military equipment from UK companies. Later in 1985 members of the EU signed the Single European Act. This made members remove all trading obstacles. It took a few years for the Single European Market to come into existence, but this was on 1 January 1993.
All of the above movements that took place in developing the EU created a common market, which allowed free movement of goods and services, and factors of production. Thus creating harmonisation between the member states of the EU, such as the same levels of taxation throughout the EU.
Below is a diagram, which illustrates all of the EU countries from 1958-2002.
Source: Anderton, A. (2002), Economics, third edition, CPL
All of the above outcomes of the EU are examples of regional integration. Regional integration can be described as the bringing together of different states under the same set of rules. This is an effort to harmonise all of the member states. Regional integration is an on going process, as its aim is to bring together all countries in Europe, to enlarge the EU. This is evident from a recent article in the Economist. Which has an article stating that the aims of enlarging the EU from 15 to 25 states is not necessarily the best thing to do, especially as Europe’s economy is not necessarily buoyant at this moment in time.
One could say that whether a state benefits from regional integration or not could depend upon the past of the state. Using examples of two states, one ‘well off’ such as Germany and one not so ‘well off’ such as Poland.
Firstly I think that Germany is well off, as it has a very good economic condition. And Poland is not well off as it has a very low GDP and its economy is not in good condition. This can be illustrated in the table below, where I have compared Germany to other EU members, including Poland.
Source: Anderton, A. (2002), Economics, third edition, CPL
It can be assumed that Germany will not benefit form regional integration as it has a particularly buoyant economy, already and it is clearly more well off than other EU members, such as the UK, Spain, Greece and at the other end of the spectrum Poland. Germany has the highest Gross Domestic Product, per capita, and the highest income per head, along with the highest population.
This indicates to me that according to EU laws that it would have to agree with the European single Market and agree to remove all of its trading barriers. I don’t think they would decide to do so as Germany would become worse off, as the value of their currency will also have to be levelled out in accordance with other member states of the EU.
Due to the Common Agricultural Policy that the EU carries out, Germany will also be applicable to be regulated in its agriculture too. They may not be in favour of this as their agriculture is worth $19 930, and may be quite set in their ways. So government intervention is not really needed, but will inevitably take place.
As a result of the changing of the value of their currency, and their agricultural productivity this will affect their GDP and could prove to make them worse off.
However with Poland, it can be assumed that they would benefit significantly from regional integration as their economic position in comparison to other EU member is low, and is very low in comparison to Germany. Poland could benefit from regional integration in the sense that it would be brought up to standards with regard to other member states. This would be done by funding by the EU, who will give financial help to the less ‘well off’. This will help to bring up the value of their currency, and the Common Agriculture Policy will intervene to help improve its agriculture. This will therefore help to increase its GDP.
The regional integration benefits are somewhat limited, as an economically buoyant state such as Germany would mist probably not benefit. As discussed above. Also a state in a poor economic condition could benefit significally from regional integration, as the EU will ensure they receive sufficient funding and help where needed. However the regional integration benefits may not be as evident to existing members within the EU, as the joining of, for example, Poland could mean that the overall high image of the EU being damaged. As at the aim of the EU is to create a buoyant and high image economy, within all member states as a whole.
Bibliography:
Alain Anderton – Economics, third edition
John Baylis and Steve Smith – The globalisation of world politics
Louckas Tsoukalis – The new European economy
www.europa.eu.int
