slides european union

8/13/2019 slides european union

1/32


2/32

World GDP

2005, current prices

EU 27

30%

US

28%

India

2%Japan

11%China

4%

Russia

2%

Brazil

2%

Rest of world

21%

Source: IMF


3/32

Source: IMF

World GDP


EU 27

25%

US21%

Rest of world

26%

Brazil

4%

Russia

3%

China

10%

Japan

8%

India

3%


4/32

World GDP


0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

EU 27 United States China Japan Germany France Brazil United

Kingdom

Italy Rus sian

Federation

India


5/32

World GDP


GDP in 2040

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

CH USA IN BR RU JP MX DE UK FR ID SK CN IT

GDP in 2040

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

CH EU USA IN BR RU JP MX ID SK CN


6/32

The European Union vs. the rest of the World

The European Union represents today around 7% of the world population but

between 25 to 30% of world GDP (current prices), w.r. to some 24% represented bythe US and some than 10% each by China and Japan

As of 2010 (last available data), it also represents between 20 to 25% of world trade

flows (not including intra-EU trade, in which case the number increases to 35%)

Through its single currency, the Euro, the EU financial markets are about 120% of

the US financial markets, with 50% of world bank assets

Hence, the EU is nowadays, notwithstanding the financial crisis, the largest

integrated market of the world, the largest trade partner of the world, and a key

player in financial markets

Surviving the crisis is fundamental not only for the welfare of the EU

citizens, but also for the entire world economy

Once the crisis is over, how to preserve the EU position in the world, i.e.

how to maintain competitiveness ?


7/32

1. The Unions aim is to promote peace, its values and the well-being of its peoples.

2. The Union shall offer its citizens an area of freedom, security and justice without internal frontiers, in whichthe free movement of persons is ensured in conjunction with appropriate measures with respect to external

border controls, asylum, immigration and the prevention and combating of crime.

3. The Union shall establish an internal market. It shall work for the sustainable development of Europe based

on balanced economic growth and price stability, a highly competitive social market economy, aiming at full

employment and social progress, and a high level of protection and improvement of the quality of the

environment. It shall promote scientific and technological advance.

It shall combat social exclusion and discrimination, and shall promote social justice and protection, equalitybetween women and men, solidarity between generations and protection of the rights of the child.

It shall promote economic, social and territorial cohesion, and solidarity among Member States.

It shall respect its rich cultural and linguistic diversity, and shall ensure that Europes cultural heritage is

safeguarded and enhanced.

4. The Union shall establish an economic and monetary union whose currency is the euro.

5. In its relations with the wider world, the Union shall uphold and promote its values and interests andcontribute to the protection of its citizens. It shall contribute to peace, security, the sustainable development of

the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the

protection of human rights, in particular the rights of the child, as well as to the strict observance and the

development of international law, including respect for the principles of the United Nations Charter.

6. The Union shall pursue its objectives by appropriate means commensurate with the competences which are

conferred upon it in the Treaties.

Objectives

GrowthStabilityCohesion + Peace & Security

Tools

The European Union goals and objectives

TEU art. 3


8/32

GROWTH

GDP Growth rate forecast


9/32

GROWTH: Real GDP growth EU vs. US

Real GDP growth, period averages

0.0

0.5

1.0

1.52.0

2.5

3.0

3.5

4.0

1970-1980

1980-1990

1991-1995

1995-2000

2000-2005

2005-2010

EU-GDP US-GDP

Source: Eurostat and OECD Productivity Dataset


10/32

GROWTH

GDP per capita in PPS for EU-15, EU-25 and Japan, 1950-2009

(US=100)

Source: Updated from Altomonte and Nava (2005), Chapter 5 on the basis of Sapir et al. (2004) and Eurostat data.

10

30

50

70

90

19 50 19 55 19 60 1 965 1 970 1 975 1 980 1985 1990 1995 1997 2000 200 3 200 4 200 5 200 6 200 7 20 08 20 09

EU-15 EU-25 Japan US


11/32

COHESION: Regional disparities in EU-27


12/32

Regional disparities in the world


13/32

STABILITY: inflation

ECB inflation target: lower than, but closeto, 2%

Refi rates by the ECB are set accordingly


14/32

STABILITY: public deficit & public debt

EU Treaties target for public debt: equal to, or converging at, 60% of GDP andpublic deficit lower than 3% of GDP


15/32

0

2

4

6

8

10

12

14

16

18

20

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

EL

IE

IT

ES

FR

DE

On 2 May 1998 the European

Council unanimously decided

that 11 Member States had

fulfilled the conditions necessary

for the participation in the third

stage of EMU and the adoption

of the single currency on 1 Jan

1999. Greece (the 12th) adopted

it on 1 Jan 2001.

The Greek crisis

explodes in the EMU

STABILITY: spread of interest rates


16/32

The EU Enlargement

Carlo ALTOMONTE


17/32

Enlargement and EU goals

The European Union has become the largest market in the world, with remarkable

levels of economic and social cohesion.

It has achieved this status through the development of some tools (policies) that

have contributed in deepening the process of economic integration

The Single Market through the free circulation of goods, services, capital and

people has contributed to economic growth(although we can score better here)

The EMU has succeeded in ensuring to the EU a remarkable level of stability

but has to cope with the consequences of the economic crisis

The EU regional policy developed within the EU budget has succeeded in

increasing cohesionwithin the EU

At the same time, the European Union has achieved its current status also bywidening its policies to an increasingly larger set of participating countries or

Member States: from six founding members in 1951/57 (D, F, I, BeNeLux) to 27 as

of 2007. The latter has profound implications on the working of the EU.


18/32


19/32

1957

1973

1986

1981

1995

Luxembourg

Group

Helsinki Group

2004EU25

2007 EU27

Turkey

(?)

The EU enlargements

2012 ?


20/32

We can identify three main reasons behind the wideningof the EU, in particular

to the Central and Eastern European Countries (CEECs):

History - geography - culture:the division of the second half of the

last century has been an artificial caesura in what has been a shared

path of evolution for centuries.

Politics and security: given the prosperity of the EU, to deny

membership would have posed a serious problem of security at the EU

borders, let alone this being contrary to the spirit of the EU Treaty;

Economics: market integration clearly anticipated the political process

Why the enlargement ?


21/32

The enlargement of the EU is commonly referred to as one of the most

successful cases of economic development in history.

How was that possible?

- definition of a clear legal framework => Europe Agreements

- definition of clear criteria for membership => Copenhagen criteria

- aid in the implementation of the criteria => Reinforced pre-accession strategy

How to ensure a successful enlargement ?


22/32

Country

Signature of

Association

Agreement

Accession

Application

date

Closed

Chapters

(Tot. 31)

Bulgaria 1-3-1993 14-12-1995 23

Cyprus 19-12-1972 3-07-1990 31Czech Rep. 6-10-1993 17-1-1996 31

Estonia 12-6-1995 24-11-1995 31

Hungary 16-12-1991 31-3-1994 31

Latvia 12-6-1995 13-10-1995 31

Lithuania 12-6-1995 8-12-1995 31

Malta 5-12-1970 3-7-1990 31

Poland 16-12-1991 5-4-1994 31

Romania 8-2-1993 22-6-1995 16

Slovakia 6-10-1993 27-6-1995 31

Slovenia 10-6-1996 10-6-1996 31

Turkey 12-9-1973 14-4-1987 -

Situation at end of 2003

Accession clause

Membership

Accession TreatyDrafted by the European Commission, voted by EU Council and EU Parliament

Ratified by all the Member States + the Candidate Country

Incorporation of the

Community acquis

Bilateral National Programmes for the Adoption of the Acquis: priorities for

each country and highlight the main instruments and financial resources available

to close the chaptersof the accession negotiations effectively.

Pre-accession Assistance: Phare - SAPARD - ISPA

Copenhagen criteria

I and II

Association Agreements

The Accession Strategy

Accession country

Candidate country

political: stable institutions guaranteeing

democracy, rule of law, human rights, minorities;

economic: a functioning market economy


23/32

Accession negotiations: state of play, December 2003


24/32

Pre-Accession Assistance

Phare

- finances Institution Building measuresacross all sectors and investment in

fields not covered by the other two

instruments, including integrated

regional development programmes

- has an annual budget of1,560 million

ISPA

- finances major environmental and

transport infrastructure projects

- has an annual budget of1,040 million

SAPARD

- finances agricultural and rural

development

- has an annual budget of520 million

Phare commitments 1990-1999

Yearly pre-accession commitments since 2000


25/32

Post 2004: the incorporation of the Community acquis


26/32

Post 2004 financial transfers


27/32

Chronology of Eastern Enlargement

December 1991: Europe agreementswith Poland, Hungary and the Czech Republic

June 1993: The Copenhagen European Council I states the the associated countries of Central and Eastern

Europe (CEECs) can become EU Members provided that they fulfil three criteria: political, economic, and fullintegration of the acquis communautaire

December 1997: the Luxembourg European Council states that the enlargement process affects all the ten

CEECs plus Malta and Cyprus; it calls for the opening of bilateral negotiations between the EU and those

countries which the Commission judges ready to enter in the negotiation phase

30 March 1998: On the basis of this Commission evaluation, the process of formal accession starts for 5 CEECs

(Estonia, Poland, Czech Rep., Slovenia, Hungary) and Cyprus

December 1999: The formal accession process is extended by the Helsinki European Councilto the remaining

CEECs (Lithuania, Latvia, Bulgaria, Romania, Slovakia) and Malta. Turkey gains the status of candidate country,

but no negotiations are started

December 2000: The ICG for institutional reforms is closed with a draft Treatyapproved in Nice. The Treaty

enters into forceon the 1st of February 2003.

9 October 2002: the Commission states that eight CEECs (the Luxembourg group + Lithuania, Latvia, Slovakia

and Malta) will meet the Copenhagen criteria by the end of 2002, and formally recommends to the EuropeanCouncil the closureof the accession negotiationsand the subsequent signatureof the accession Treaties.

25 October 2002: a special European Councilheld in Brusselsendorses the Commission proposal.

12 - 13 December 2002: the Copenhagen European Council IIofficially close the accession negotiations with

eight CEECs + Malta and Cyprus; a financial packageis agreed for each of the years 2004-2005-2006.

16 April 2003: the Accession Treatiesfor the new Member States are signedin Athens.

May 2004: ten new Member States willjoin the European Union.


28/32

State of play of enlargement negotiations
http://ec.europa.eu/enlargement/countries/check-current-status/index_en.htm


29/32

Because of the non fulfilment of the first, and partly the second, Copenhagen criteria,Turkeywas

granted the status of candidate country in 1999 at the Helsinki European Council, but

negotiations did not start. After that date, there have been some progresses: abolishment of the death penalty in Turkey (July 2002)

presence of a Kurdish party at the last elections

normalisation of the Greek-Turkish diplomatic relationships.

As a result, following a Commission proposal, in December 2004 the European Council approved

(unanimously) to start negotiationsin October 2005. The major issuesat stake are:

Political: Turkey is a NATO member and a potential model of a moderate Islamic society

Demographic: Turkey would be the 2nd largest EU member state, and by 2015 the first

Immigration: there are roughly 2.5M of regular Turkish immigrants in Germany, potentially

gaining active electoral status as they become EU citizens

Financial: the EU budget is not capable of granting the same level of aids to Turkey within itscurrent revenue system (the regional policy alone would imply an expenditure for Turkey of

more than 100Blnfor each programming period, i.e. 1/3 of the current total)

Religion isnot an issue: the EU (Copenhagen criterion I) forbids any discrimination on the

basis of religion. Moreover, even without Turkey, there will be some 30M Muslims in EU in the

next 10 years

The case of Turkey


30/32

Regional disparities in Turkey

For reference, the Turkish average p.c. GDP is equal to 47% of the EU one.

Istanbul, the richest region in Turkey, has a per capita GDP roughly equal to the

one of Slovenia (85% of EU average)


31/32

State of play of EU-Turkey accession negotiations


32/32

Long run asymmetric implications of the crisis

The long-run impact of the crisis on potential growth seems to have been larger forEastern European countries, with the ensuing consequences in terms of overall EU-

27 growth and cohesion

slides european union

Documents