City of London– March City of London– March 20082008

IntroductionIntroduction

The evolution of the European The evolution of the European UnionUnion

How it started and expanded since theHow it started and expanded since the

end of the Second World War in 1945end of the Second World War in 1945

A quick journey that starts in the days A quick journey that starts in the days immediately after World War 2.immediately after World War 2.

The evolution of the European The evolution of the European UnionUnion

1948 – Plans begin to build a 1948 – Plans begin to build a ‘peaceful’ Europe – Congress of The ‘peaceful’ Europe – Congress of The Hague and Council of Europe. Hague and Council of Europe. Marshall Aid arrives.Marshall Aid arrives.

1949 – NATO created=mutual 1949 – NATO created=mutual defence and the US is supportive of defence and the US is supportive of more integration in Europe.more integration in Europe.

Evolution Evolution

1950 – The Schuman Declaration – France 1950 – The Schuman Declaration – France and Germany to pool resources of coal and and Germany to pool resources of coal and steel. ’solidarity in production would make steel. ’solidarity in production would make war unthinkable and materially impossible’.war unthinkable and materially impossible’.

1951 – Treaty of Paris establishes ECSC – 1951 – Treaty of Paris establishes ECSC – which includes Benelux countries and Italy.which includes Benelux countries and Italy.

1952 – ECSC starts and many consider this 1952 – ECSC starts and many consider this to be the real start of European Community.to be the real start of European Community.

Evolution Evolution

1952 – ECSC starts work with Jean 1952 – ECSC starts work with Jean Monnet as President.Monnet as President.

1954 – European Defence 1954 – European Defence Community emerges – German Community emerges – German soldiers encouraged to join but soldiers encouraged to join but French national assembly rejects French national assembly rejects this.this.

1957 – Treaty of Rome signed by 6 1957 – Treaty of Rome signed by 6 original signatoriesoriginal signatories

Evolution Evolution

1958 – European Community launched1958 – European Community launched 1960 – EFTA launched with UK a 1960 – EFTA launched with UK a

member. No common external tariff.member. No common external tariff. 1961 – Britain, Denmark and Ireland 1961 – Britain, Denmark and Ireland

apply to join EC. De Gaulle rejects UK apply to join EC. De Gaulle rejects UK application.application.

1963 – De Gaulle rejects second UK 1963 – De Gaulle rejects second UK application.application.

Evolution Evolution

1968 – The European Community 1968 – The European Community customs union is completed.customs union is completed.

1973 – UK, Demark and Ireland join 1973 – UK, Demark and Ireland join EC. Norway rejects membership in EC. Norway rejects membership in national referendum. UK referendum national referendum. UK referendum I 1975 supports entry 2:1.I 1975 supports entry 2:1.

1979 – EMS starts to be discussed 1979 – EMS starts to be discussed and Ecu introduced for internal and Ecu introduced for internal transactions and travellers cheques transactions and travellers cheques and bank deposits.and bank deposits.

EvolutionEvolution

1981 – Greece joins EC1981 – Greece joins EC 1984 – UK wins budget rebate1984 – UK wins budget rebate 1985 – Jacques Delors becomes 1985 – Jacques Delors becomes

President of European Community. President of European Community. Aims to remove all barriers to trade by Aims to remove all barriers to trade by 1992 and so create a ‘single market’. 1992 and so create a ‘single market’. Essential if EU to be competitive with Essential if EU to be competitive with USUS

1986 – Spain and Portugal join EC1986 – Spain and Portugal join EC

EvolutionEvolution

1987 – European Single Act signed. It 1987 – European Single Act signed. It abolishes national vetoes in many abolishes national vetoes in many areas, so enabling a single market to areas, so enabling a single market to emerge. The members will now emerge. The members will now become part of a ‘European Union’.become part of a ‘European Union’.

1988 – Regional Aid doubled. The 1988 – Regional Aid doubled. The expansion of structural funds to expansion of structural funds to poorer regions and countries.poorer regions and countries.

EvolutionEvolution

1990 – UK joins ERM.1990 – UK joins ERM. 1991 – Maastricht Treaty signed – 1991 – Maastricht Treaty signed –

monetary union and European monetary union and European citizenship created. UK ‘opt out’ on citizenship created. UK ‘opt out’ on euro and social policy.euro and social policy.

1992 – UK leaves ERM. ‘Black 1992 – UK leaves ERM. ‘Black Wednesday’.Wednesday’.

1993 – Maastricht Treaty ratified.1993 – Maastricht Treaty ratified.

EvolutionEvolution

1995 – Borders come down as result 1995 – Borders come down as result of Schengen Agreement. UK does not of Schengen Agreement. UK does not join and Norway rejects membership join and Norway rejects membership of EU in second referendumof EU in second referendum

Amsterdam Treaty signed – gets EU Amsterdam Treaty signed – gets EU ready for ‘eastward’ move.ready for ‘eastward’ move.

1998 – Talks start for major 1998 – Talks start for major enlargementenlargement

EvolutionEvolution

1999- fraud problems hit EU.1999- fraud problems hit EU. 2002 – Euro replaces 10 national 2002 – Euro replaces 10 national

currencies.currencies. 2003 – Plans for EU Constitution 2003 – Plans for EU Constitution

suffer set backs.suffer set backs. 2004 – 10 new members join2004 – 10 new members join 2005 – Constitution rejected and 2005 – Constitution rejected and

budget difficultiesbudget difficulties 2007 – Enlarged to 27 members2007 – Enlarged to 27 members

EvolutionEvolution 25 March, 195725 March, 1957

His Majesty The King of the Belgians, the President of the Federal His Majesty The King of the Belgians, the President of the Federal Republic of Germany, the President of the French Republic, the Republic of Germany, the President of the French Republic, the President of the Italian Republic, Her Royal Highness The GrandPresident of the Italian Republic, Her Royal Highness The GrandDuchess of Luxembourg, Her Majesty The Queen of the Netherlands,Duchess of Luxembourg, Her Majesty The Queen of the Netherlands,

resolved by pooling their resources to preserve and strengthen peace resolved by pooling their resources to preserve and strengthen peace and liberty and and liberty and calling upon the other peoples of Europe who share calling upon the other peoples of Europe who share their ideal to join in their effortstheir ideal to join in their efforts,,

From Six to Fifteen

1957

1973

From Six to Fifteen

From Six to Fifteen

1981

From Six to Fifteen

1986

1995

From Six to Fifteen

2001

From Six to Fifteen… and Beyond

The EU - 2007The EU - 2007

Croatia and MontenegroCroatia and Montenegro

Croatia Croatia Montenegro Montenegro

Serbia and BosniaSerbia and Bosnia

Macedonia and AlbaniaMacedonia and Albania

Turkey and the Kossovo IssuesTurkey and the Kossovo Issues

Being inside the Single MarketBeing inside the Single Market

Free movement of product, people and capital (soon services) Free movement of product, people and capital (soon services) with no artificial barriers to trade BUT protected where with no artificial barriers to trade BUT protected where necessary from outside competition by Common External necessary from outside competition by Common External tarifftariff

Benefits arising from free trade within the Single MarketBenefits arising from free trade within the Single Market - -

Opportunity to exploit their various Opportunity to exploit their various comparative advantagescomparative advantages in many industries as in many industries as possible and increase exports to “richer nations” as a source of further economic possible and increase exports to “richer nations” as a source of further economic developmentdevelopment

- Enlargement will eventually create a Single Market of over - Enlargement will eventually create a Single Market of over 500 million 500 million consumers, consumers, with relatively similar tastes in consumer durableswith relatively similar tastes in consumer durables

Other advantages of enlargementOther advantages of enlargement

Most accession countries will be to net recipients of Most accession countries will be to net recipients of income from EU programmesincome from EU programmesa. a. Common Agricultural PolicyCommon Agricultural Policy- though only 25% of current subsidies paid to the older member - though only 25% of current subsidies paid to the older member states.states.

b. b. Social Cohesion and Regional FundsSocial Cohesion and Regional Funds – to bring them to 75% – to bring them to 75% of NNI figures of all membersof NNI figures of all membersc. To the receipts of receipt of EU funds one needs to add various c. To the receipts of receipt of EU funds one needs to add various macroeconomic advantagesmacroeconomic advantages

Potential macroeconomic advantagePotential macroeconomic advantage a. Reduced exchange rate volatility if accession countries join the a. Reduced exchange rate volatility if accession countries join the

ERM – many countries are keen to join the Euro to reduce ERM – many countries are keen to join the Euro to reduce exchange rate risk and benefit from lower interest rates. exchange rate risk and benefit from lower interest rates.

Monetary policy coordinationMonetary policy coordination with the European Central Bank with the European Central Bank- Lower inflation will help bring down long term interest rates (this - Lower inflation will help bring down long term interest rates (this is good for investment)is good for investment)

Other advantages of enlargementOther advantages of enlargement

The main aims of joining the EU for The main aims of joining the EU for the accession countries are tothe accession countries are toa. Increase a. Increase economic integrationeconomic integration with Western Europewith Western Europeb. Provide a catalyst to b. Provide a catalyst to long term long term economic growtheconomic growthc. Raise relative c. Raise relative living standardsliving standards closer to the EU average-via Regional closer to the EU average-via Regional and Cohesion Funds-look at evolution of and Cohesion Funds-look at evolution of EU and the ideas of the founding EU and the ideas of the founding fathers.fathers.

Current numbersCurrent numbers

Income per capita in new member states Income per capita in new member states rose from 40% of the old member states' rose from 40% of the old member states' average in 1999 to 52% in 2008average in 1999 to 52% in 2008

Economic growth averaged 5.5% per year Economic growth averaged 5.5% per year in 2004-2008, compared to 3.5% in 1999-in 2004-2008, compared to 3.5% in 1999-2003. 2003.

The old member states averaged annual The old member states averaged annual growth of around 2.2% in the last four growth of around 2.2% in the last four years. years.

Current NumbersCurrent Numbers

In 2007, almost 80% of exports of the new In 2007, almost 80% of exports of the new member states went to the rest of the EU. member states went to the rest of the EU. Old member states also saw their sales to Old member states also saw their sales to the new members increase to around 7.5% the new members increase to around 7.5% of their total exports in 2007, from 4.75% of their total exports in 2007, from 4.75% a decade ago. a decade ago.

It is now the world's biggest integrated It is now the world's biggest integrated economic area, with half a billion people economic area, with half a billion people producing 30% of global economic output producing 30% of global economic output and 17% of world trade.and 17% of world trade.