The European Union & Promotion of Globalization

Globalization & Integration in Europe

The European Union & Promotion of Globalization

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The European Union is an economic and political partnership that exists between 27 European countries. The EU was created after World War II. The guiding principle was to create a coalition which would foster economic cooperation through trade and as a result avoid conflicts and war. The result of the EU has been a half a century of peace, stable governments, and prosperity for members. The member nations of the EU have increased standards of living, created a single European currency (Euro), and have progressively built a single structured European market (Europa, 2011). Within the EU trade and sales take place as if one were operating within one country with the euro as its common currency. The EU has expanded into an organization which also works towards development and sets policies for many nations.

The EU supports the promotion of human rights and democracy. By abolishing border controls individuals living in the EU can work in any member nation and travel freely. This creates a major advantage for individuals living in the EU as no one area can be economically depressed without other areas helping to offset the economic burden. The EU is budgeted from a percentage of member nation’s gross national product (Europa, 2011). This budget provides economic relief to poor areas in the EU, goes to food safety enforcement, and is used for economic development strategies (Europa, 2011).

The Euro and EU Revenue

The EU obtains revenue from member nations also from import taxes on products outside the union. This promotes trade within the Union but does not promote a free market needed for globalization. This presents several areas of criticism with regard to the EU including competitiveness, efficiency, and even sound economic structure. Is the EU truly competitive when it has price fixed imports in order to protect its member nations? The answer to this question is complex because it depends upon the import nation being compared. For instance, the EU pales in comparison to the competitiveness of China in the world market. Yet the EU is also far more efficient than countries such as Russia which lack the ability to pull resources in the manner which the EU can from its member nations (Ottaviano et al, 2009).

The largest action of the EU has been the instituting of the Euro as a new form of currency. The results of financial studies on the Euro have been heterogeneous. This lack of similarity is in part due to the different econometric specifications of these studies. However the consensus of most economists,

…seems to be that the euro has had a positive effect on trade, in the order of 3% to 10%. To generate our counterfactuals, we select the results of the most convincing study so far, which reports the following coefficients: 8.8% for intra-euro area trade, 7.1% for euro area exports to non-euro area countries, and 0.8% for euro area imports from outside the area (Ottaviano et al, 2009).

In benchmarked studies researchers found that reduced trade frictions allowed for increased trade and profit. Simply speaking, the less effort that needed to be put into currency transactions saved governments and businesses large amounts of money and time. The increased monetary efficiency allows for more developmental projects between countries such as highway construction and shared projects such as the supercollider (Ottaviano et al, 2009).

As well as monetary efficiency the euro makes for market efficiency. The Euro is used by approximately 327 million Europeans (Ottaviano et al, 2009). This allows anyone to buy freely between merchants and different countries without having to exchange currencies. As well this single monetary currency allows for greater ecommerce since there are no exchange rates.

EU Institutions and Other Bodies

Unlike the United States, the EU is not a federation. Yet it is not simply a financial organization or cooperation between governments. The countries that create the EU are independent sovereign nations but they pool their sovereignty. This shared sovereignty is a decrease in autonomy since the EU can create laws and policies which govern all of the nations within the union. The sovereignty is however focused on economic development and on peace keeping within the EU. This focus allows countries to maintain their independent laws and policies which may or may not conflict with other countries in the EU. The centerpiece of the EU has been human rights and democratic process. This focus makes the EU a strong ally to the United States.

The Tools and Institutions in the EU

The institutions which comprise the EU include:

1. The European Parliament, which represents the citizens of the EU. These individuals are elected by EU citizens.
2. The Council of the European Union, which represents the individual member countries.
3. The European Commission, which is a designed to uphold the interests of the Union as a whole. (Europa, 2011)

These institutions create the policies and laws that apply to the EU as a whole. While the Commission proposes new laws it is the Parliament and Council that adopt them. The system is similar to the democratic process of law creation in the United States government. Similarly the three units of the EU government have checks and balances to maintain a balance of power. Since its inception the EU has founded many other institutions which provide support and stability to the EU:

1. The Court of Justice upholds the rule of European law, and
2. The Court of Auditors checks the financing of the Union’s activities.
3. the European Economic and Social Committee represents civil society, employers and employees;
4. the Committee of the Regions represents regional and local authorities;
5. the European Investment Bank finances EU investment projects, and helps small businesses via the European Investment Fund;
6. the European Central Bank is responsible for European monetary policy;
7. the European Ombudsman investigates complaints about maladministration by EU institutions and bodies;
8. the European Data Protection Supervisor safeguards the privacy of people’s personal data;
9. the Office for Official Publications of the European Communities publishes information about the EU;
10. the European Personnel Selection Office recruits staff for the EU institutions and other bodies. (Europa, 2011)

Advantages and Disadvantages of the EU

There are many advantages and some disadvantages to being a member of the EU. The largest disadvantage to the EU is that it reduces a member nation’s sovereignty. This pooling of authority does not always benefit every country and sometimes creates scenarios where countries must lose money in order to remain in the EU. For instance, Denmark had to stop taxing imports on goods coming from countries within the EU. While joining the EU has benefitted Denmark it also caused a short-term deficit.

The advantages to membership seem to outweigh the disadvantages. For instance, the reduction of war probability has been a phenomenal advantage and this cost cannot even be measured. As well all EU countries are bound to restrictions and policies which make them stakeholders in the EU and therefore are working towards favorable economics and development. Another major advantage is the Euro in that it provides monetary stability, eliminates exchange rates and favors trade.

The future will show if the EU will maintain these advantages. While the EU strengthens each member country because it creates a larger economic power it still remains to be seen if this structure will continue to be beneficial in the future. As a relatively new institution the EU is still undergoing an evolution where it continues to expand beyond mere economic policy making. In the future the advantages of the EU could turn negatively depending upon circumstances. For instance, if several countries were to be economically depressed this could create instability throughout the entire EU. Currently, the prospects seem positive that the EU will continue to grow and remain sustainable.

References

Europa (2011) All about the EU http://europa.eu/about-eu/index_en.htm

G. Ottaviano, D. Taglioni and Di Mauro, F. (2009) The Euro and the Competitiveness of European Firms. Economic Policy. January 2009, 57 pp. 5–53.

~Citation~

Vincent Triola. Sun, Mar 14, 2021. The European Union & Promotion of Globalization Retrieved from https://vincenttriola.com/blogs/ten-years-of-academic-writing/the-european-union-promotion-of-globalization

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