Economic Integrationa state of affairs or a process which involves the

amalgamation of separate economies into larger free trading regions.

Three levels of economic integrationGlobal: trade liberalization by GATT or WTO

Regional: preferential treatment of member countries in the group Bilateral: preferential treatment between two countries

Regional and bilateral agreements are against the MFN clause (normal trading relations), but allowed under WTO.

Stages of Economic Integration

• Free trade areas • Customs unions• Common markets• Complete economic unions• Complete political unions

Stages of Economic Integration

• FTA (free trade area): – no internal tariffs among members, but each country

imposes its own external tariffs to the third country.– NAFTA (North America Free Trade Agreement– AFTA (ASEAN Free Trade Area)– EFTA (European Free Trade Area)

• Customs union: – no internal tariffs and common external tariffs– Mercosur (Southern Common Market), – CACM (Central American Common Market)– CARICOM (Caribbean Community and Common Market)

Stages of Economic Integration

• Common market: – free movement of products and factors

(resources), which is customs union plus factor mobility

– EU (European Union – previously EEC)• Economic union: – common market plus common currency – coordination of fiscal and monetary policy– EMU (Economic and Monetary Union)

Effects of Economic Integration

• Static effects: Short-term effects (shift of production)– Trade creation: production shifts to more efficient member

countries from inefficient domestic or outside countries. – Trade diversion: production shift to inefficient member

countries from more efficient outsiders.

• Dynamic effects: Long-term effects– Cost reduction due to economies of scale – Cost reduction due to increased competition.

EUROPEAN UNIONOver 500 million citizens

Largest economy in the world: €12.0 trillion ($16.6 trillion) GDP in 2012

GDP per capita: $33,000 (nominal), $32,021 (PPP)

GDP by sector: 70.5% services, 27.3% industry, 2.1% agriculture

World Trade in Goods

World Trade in Commercial Services

GDP GDP Annual GDP Public Debt Deficit (-)/ Inflation Unemp.

in billions % of EU change per capita % of GDP Surplus (+) % Annual %

of USD 2012 % of GDP in PPP US$ (2013 Q1) % of GDP 2012 2013 M7Member State

2012 2012 2012 2012

European Union 16,584.00 100 −0.3 32,021 85.9 −4.0 2.6 10.9

Germany 3,400.60 20.50% 0.7 39,028 81.2 0.2 2.1 5.3

France 2,608.70 15.70% 0 35,548 91.9 −4.8 2.2 11

United Kingdom 2,440.50 14.70% 0.3 36,941 88.2 −6.3 2.8 7.7

Italy 2,014.10 12.10% −2.4 30,136 130.3 −3.0 3.3 12

Spain 1,352.10 8.20% −1.4 30,557 88.2 −10.6 2.4 26.3

Netherlands 773.1 4.70% −1.0 42,194 72 −4.1 2.8 7

Sweden 526.2 3.20% 0.8 41,191 39.4 −0.5 1 8

Poland 487.7 2.90% 1.9 20,592 57.3 −3.9 3.7 10.4

Belgium 484.7 2.90% −0.2 37,883 104.5 −3.9 2.6 8.9

Austria 398.6 2.40% 0.8 42,409 74.2 −2.5 2.6 4.8

Denmark 313.6 1.90% −0.5 37,657 44.7 −4.0 2.4 6.7

Greece 256.3 1.60% −6.4 24,505 160.5 −10.0 1 27.9

Finland 250.1 1.50% −0.2 36,395 54.8 −1.9 3.2 7.9

GDP GDP Annual GDP Public Debt Deficit (-)/ Inflation Unemp.

in billions % of EU change per capita % of GDP Surplus (+) % Annual %

of USD 2012 % of GDP in PPP US$ (2013 Q1) % of GDP 2012 2013 M7Member State

2012 2012 2012 2012

Portugal 212.7 1.30% −3.2 23,385 127.2 −6.4 2.8 16.5

Ireland 210.4 1.30% 0.9 41,921 125.1 −7.6 1.9 13.8

Czech Republic 196.1 1.20% −1.3 27,191 47.8 −4.4 3.5 6.8

Romania 169.4 1.00% 0.7 12,808 38.6 −2.5 3.4 7.5

Hungary 126.9 0.80% −1.7 19,638 82.4 −1.9 5.7 10.4

Slovakia 91.9 0.60% 2 24,249 54.9 −4.3 3.7 14.3

Luxembourg 56.7 0.30% 0.3 79,785 22.4 −0.8 2.9 5.7

Bulgaria 51 0.30% 0.8 14,312 18 −0.8 2.4 12.7

Slovenia 45.6 0.30% −2.3 28,195 54.5 −4.0 2.8 11.2

Lithuania 42.2 0.30% 3.7 21,615 40.8 −3.2 3.2 12.1

Latvia 28.4 0.20% 5.6 18,255 39.1 −1.2 2.3 11.5

Cyprus 23 0.10% −2.4 27,086 86.9 −6.3 3.1 17.3

Estonia 21.9 0.10% 3.2 21,713 10 −0.3 4.2 7.9

Malta 8.7 0.10% 0.8 27,022 75.4 −3.3 3.2 6

Short History• Pre-1945: Pan-Europa Movement (1923) Pan-Europa manifesto

by Richard Nikolaus von Coudenhove-Kalergi

• After 1945: Winston Churchill’s 1946 call for a "United States of Europe“

• Robert Schuman: Schuman Declaration in May 1950 (proposal of a community to integrate the coal and steel industries of Europe)

• The Six: France, Italy, Belgium, Netherlands and Luxembourg, West Germany

• Treaty of Paris (1951): European Coal and Steel Community (ECSC)

• Treaty of Rome (1957)– European Economic Community (EEC)– European Atomic Energy Community

(Euratom)

• Merger Treaty (1967)– European Communities

• Maastricht Treaty (1 November 1993) – European Union

Enlargement

• 1973: Ireland, UK, Denmark • 1981: Greece• 1986: Spain and Portugal• 1995: Austria, Sweden, Finland• 2004: CEEC-10 (Malta, Cyprus, Estonia, Latvia,

Lithuania, Poland, Czech Republic, Slovakia, Slovenia, Hungary)

• 2007: Bulgaria, Romania• 2013: Croatia

Institutions of the EU

The member states of the EU remain independent sovereign nations but they pool their sovereignty in

order to gain strength and world influence.

The member states delegate some of their decision-making powers to shared institutions they have

created, so that decisions on specific matters of joint interest can be made democratically at European

level.

The EU is governed by 7 institutions

Institutions of the EUPolitical Institutions

• European Parliament• European Council

• Council of the European Union • European Commission

Non-political Institutions Court of Justice of the European Union

European Court of Auditors European Central Bank

Institutions of the EU

Non-political institutions

–European Court of Justice • upholds the rule of European law

–European Court of Auditors • checks the financing of the EU’s activities.

European Commission• the executive arm of the EU –develop medium-term strategies–draft legislation and arbitrate in the

legislative process– represent the EU in trade negotiations–make rules and regulations–draw up the budget–with the ECJ, it acts as the guardian of the

EU treaties by enforcing EU law

European Commission• The Commission consists of 28 people

(Commissioners) — one from each EU country. • Each member is appointed by a national

government, but they do not represent their state in the Commission.

• The President of the Commission is first nominated by the European Council; that nominee is then officially elected by the European Parliament

• A new Commission is appointed every five years, within six months of the elections to the EP.

• José Manuel Barroso president since November 2004 (re-elected in 2009)

• President of EC is Jean-Claude Juncker after November 2014

Directorates-General (DG)

The Commission is divided into several departments and services.

The departments are known as Directorates-General (DGs)

Directorates-General• Agriculture and Rural Development (AGRI) • Budget (BUDG) • Climate Action (CLIMA) • Communication (COMM) • Communications Networks, Content and

Technology (CNECT) • Competition (COMP) • Economic and Financial Affairs (ECFIN) • Education and Culture (EAC) • Employment, Social Affairs and Inclusion (EMPL) • Energy (ENER) • Enlargement (ELARG) • Enterprise and Industry (ENTR) • Environment (ENV) • EuropeAid Development & Cooperation (DEVCO) • Eurostat (ESTAT) • Health and Consumers (SANCO)

Home Affairs (HOME) Humanitarian Aid (ECHO) Human Resources and Security (HR) Informatics (DIGIT) Internal Market and Services (MARKT) Interpretation (SCIC) Joint Research Centre (JRC) Justice (JUST) Maritime Affairs and Fisheries (MARE) Mobility and Transport (MOVE) Regional Policy (REGIO) Research and Innovation (RTD) Secretariat-General (SG) Service for Foreign Policy Instruments (FPI) Taxation and Customs Union (TAXUD) Trade (TRADE) Translation (DGT)

President of the Council

• The President of the European Council is the person responsible for chairing and driving forward the work of the European Council.

• The current president is Herman Van Rompuy from Belgium.

• Donald Tusk from Poland taking office on 1st December 2014

European Parliament• shares the legislative and

budgetary authority of the Union with the Council

• elected every 5 years by universal adult suffrage and sit according to political allegiance

• Located in Strasbourg and Brussels

European Parliament• accession by new member nations;• association agreements with non-members;• the conclusion of international agreements;• decisions affecting the right of residence for

EU citizens;• its own electoral procedures;• the task and powers of the ECB

• The President of the European Parliament presides over the debates and activities of the European Parliament. He or she also represents the Parliament within the EU and internationally. The President's signature is required for enacting most EU laws and the EU budget.

• Presidents serve two-and-a-half-year terms • The current President is Martin Schultz

European Parliament: Committees• Foreign Affairs

• Development

• International Trade

• Budgets

• Budgetary Control

• Economic and Monetary Affairs

• Employment and Social Affairs

• Environment, Public Health and Food Safety

• Industry, Research and Energy

• Internal Market and Consumer Protection

• Transport and Tourism

Regional Development

Agriculture and Rural Development

Fisheries

Culture and Education

Legal Affairs

Civil Liberties, Justice and Home Affairs

Constitutional Affairs

Women's Rights and Gender Equality

Petitions

Human Rights (Subcommittee)

Security and Defence (Subcommittee)

European Parliament: Groups

• European People's Party (EPP)• Progressive Alliance of Socialists and Democrats (S&D)• Alliance of Liberals and Democrats for Europe (ALDE)• The Greens–European Free Alliance (Greens–EFA)• European Conservatives and Reformists (ECR)

• European United Left–Nordic Green Left (GUE-NGL)• Europe of Freedom and Democracy (EFD)

• Non-Inscrits (NI)

European Parliament: Groups

Institutional Reform

European Constitution• replace the existing Treaties of the EU• give limited legal force to the Charter of

Fundamental Rights• Expand Qualified Majority Voting into policy

areas which had previously been decided by unanimity among member states

European Constitution

• signed in October 2004 by representatives of the 25 member states

• 13 member states completed the ratification procedure

• French and Dutch voters rejected in 2005• the future of the Constitution?

Lisbon Treaty

• 13 December 2007: Lisbon Treaty• must be ratified by all Member States• Ireland: the only member state to hold a

referendum –rejected on 12 June 2008–approved on 2 October 2009

• Entered into force on 1 December 2009

Policies of the EU• Agriculture, fisheries and food

• Business• Climate action

• Cross-cutting policies• Culture, education and youth• Economy, finance and tax

• Employment and social rights• Energy and natural resources

• Environment, consumers and health• External relations and foreign affairs• Justice, home affairs and citizens' rights

• Regions and local development• Science and technology• Transport and travel

Agriculture, fisheries and food

• Agriculture and Rural Development– Agricultural markets– CAP (Common Agricultural Policy)– Rural development

• Fisheries– Aquaculture– CFP (Common Fisheries Policy)

• Food safety– Animal diseases– Animal welfare– Food labelling– Food quality– GMOs– Plant health

Business• Enterprise– Enterprise policies– Free movement of goods– Industry sectors– Small and Medium-sized enterprises– Your Europe - Business

• Internal market– Competition– Competitiveness and Innovation Framework Programme– Free movement of services– Market access

Climate Action

• 2030 Framework on climate and energy• Citizens' information• EU Climate Action• Policy

Cross-cutting policies

• Better Regulation• Europe 2020 - strategy for growth and jobs• Impact assessment of new initiatives• Multilingualism

Culture, education and youth

• Audiovisual and media– Media Coordination (MTF)

• Culture– Culture

• Education and training– Education and Training policy– Erasmus+– Languages and multilingualism– Sport– Youth– European Youth Portal

Economy, finance and tax• A Single Market for Capital

– Better access to finance– Financial services– Free movement of capital

• Budget– EU Budget– Reforming the Budget, Changing Europe

• Competition– Anti-trust– Cartels– Information for Consumers– International– Liberalisation– Mergers– State aid

Economy, finance and tax

• Customs– Tariffs

• Economy– Economic policies– Euro

• Fight against fraud– OLAF (European Anti-Fraud Office)– Taxation

Employment and social rights• European Globalisation Adjustment Fund• European Social Fund• Funding for employment and social solidarity• Gender equality• Health and safety at work• Labour law• More and better jobs• Pensions• Social and demographic trends• Social dialogue• Social inclusion• Social protection• Working abroad

Energy and natural resources

• Energy policies• Energy strategies• Sustainable and responsible business• Trans-European networks

Environment, consumers and health• Consumers

– Chemicals– Consumer protection and rights

• Environment– Air– Chemicals– Civil protection– Nature and Biodiversity– Noise– Soil– Waste– Water

• Health– Drugs– Human diseases– Medicines– Tobacco

External relations and foreign affairs• Common Foreign Security Policy (CFSP)

– Civilian Crisis Management– Conflict Prevention– Development and Developing countries– Enlargement– European Neighbourhood policy– European Union in the World– External Cooperation Programmes– Peacekeeping operations

• Foreign policies– Humanitarian aid (Humanitarian Aid department - Echo)– International trade and trade agreements (External trade)

Justice, home affairs and citizens' rights

• Citizens' rights– Childrens' rights– Data protection– Disability issues– EU citizens' rights– Fundamental rights– Tackling discrimination

• Home affairs– Asylum– Borders & border control– Fight against crime– Fight against Terrorism– Immigration– Police matters– Schengen– Visa

Justice• Criminal justice• Drug trafficking• Judicial cooperation

Regional policy

• Cohesion Fund• European Regional Development Fund• European Social Fund• The European Union Solidarity Fund

Science and technology• European Institute of

Innovation and Technology• Information Society

– Audiovisual and Media Policies– Communications– Digital Agenda for Europe– ICT Research– Internet– Media Coordination (MTF)– Media Literacy– MEDIA Programme

Life sciences and biotechnology

Nanotechnology Research

• EURAXESS - Researcher's Mobility Portal

• Horizon 2020 Space

Transport and travel

• EU citizens rights when travelling in Europe• EU driving licence• Passenger rights• Passenger safety• Services sector• Tourism• Trans-European networks• Transport policies