The European Union or EU is an international organisation of 25 European states, established by the Treaty on European Union (the Maastricht treaty). Its current legal base is the Treaty of Nice which entered into force on February 1, 2003.

The European Union has many activities, the most important being a common single market, consisting of a customs union, a single currency (though some member states retain their own), a Common Agricultural Policy and a Common Fisheries Policy. The European Union also has various initiatives to co-ordinate activities of the member states.

Status

The European Union is the most powerful regional organisation in existence. In certain areas, where Member States have transferred national sovereignty rights to the Union (e.g. currency, monetary policy, the internal market, foreign trade), the EU begins to resemble a federal state. However, the Union is not organised federally but according to the subsidiarity principle (a term expressly created to describe the peculiar organisation of the Union's competencies). Also, the Member States remain the Masters of the Treaties and the Union does not have the power to transfer additional competencies from the Member States onto itself. On account of its unique structure, the European Union can be regarded not merely as an international organisation, but rather as a sui generis entity (i.e. an entity unlike any other).

Current issues

Major issues concerning the European Union at the moment include its enlargement south and east (see below), the European constitution proposed by the Convention, the Union's relationship with the United States of America and participation in the Euro by those member states currently outside the Eurozone.

Since 4 October 2003, the Intergovernmental Conference is deliberating on the Draft Constitutional Treaty which had been submitted by the Convention on the Future of Europe on 20 June 2003. A first attempt to reach an overall compromise failed in December 2003 when European Heads of State could not agree on a new formula defining the so-called qualified majority rule for voting in the Council.

Origins

The original impetus for the founding of (what was later to become) the European Union was the desire to rebuild Europe after the disastrous events of World War II, and to prevent Europe from ever again falling victim to the scourge of war. For more details see History of the European Union.

Methods

To accomplish this aim, the European Union attempts to form infrastructure that crosses state borders. Harmonised standards create a larger, more efficient market – member states can form a single customs union without loss of health or safety. For example, states whose people would never agree to eat the same food might still agree on standards for labelling and cleanliness.

The power of the European Union reaches far beyond its borders, because to sell within it, it is beneficial to conform to its standards. Once a non-member country's factories, farmers and merchants conform to EU standards, most of the costs of joining the union have been sunk. At that point, harmonising laws to become a full member creates more wealth (by eliminating the customs costs) with only the tiny investment of actually changing the laws.

Regarding non-economic issues, supporters of the European Union argue that the EU is also a force for peace and democracy. Wars that were a periodic feature of the history of Western Europe have ceased since the formation of the EEC as it then was. In the early 1970's, Greece, Portugal and Spain were all dictatorships, but the business communities in these three countries wanted to be in the EU and this created a strong impetus for democracy there.

In more recent times, the European Union continues to extend its influence to the east. It has accepted several new members that were previously behind the Iron Curtain, and has plans to accept several more in the medium-term. It is hoped that in a similar fashion to the entry of Spain, Portugal and Greece, membership for these states will help cement economic and political stability.

Further eastward expansion also has long-term economic benefits, but the remaining European countries are not viewed as currently suitable for membership, especially the troubled economies of countries further east. Eventually including states that are currently politically unstable will, it is hoped, help deal with the lingering consequences of such problems as the Yugoslav wars, or avoid such conflicts as the Cyprus dispute in the future.

History

The body was originally known as the European Economic Community (informally called the Common Market in the UK), this later changed to the European Community and then to the European Union. The EU has evolved from a trade body into an economic and political partnership.

For a more detailed history, see the article History of the European Union. For the legal history, see Legal history and governing treaties (below).

Member states and successive enlargements

main articles: European Union member states, Enlargement of the European Union

Since 1 May 2004, the European Union comprises 25 member states. In 1952/1958 the six founding members were:

• Belgium
• France
• West Germany
• Italy
• Luxembourg
• Netherlands

Nineteen further states have joined in successive waves of enlargement:

• in 1973: Denmark, Ireland, and the United Kingdom
• in 1981: Greece
• in 1986: Portugal and Spain
• in 1990: the European Union territory and population was effectively enlarged when East and West Germany were united.
• in 1995: Austria, Finland, and Sweden
• in 2004: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovakia and Slovenia

Map of EU member states

Further information about future enlargements can be found in Enlargement of the European Union article.

Many countries, such as Monaco and Andorra, while not being member states have special agreements with the union. (See the special relationships with the EU article)

The total area of the 25 member states (2004) of the European Union is 3,892,685 km². Were it a country, it would be the seventh largest in the world by area. The number of EU citizens (all EU member state citizens or subjects, under the terms of the Maastricht treaty) in the 25 member EU is approximately 453 million as of March 2004. This would be the third largest in the world after India and China.

Overseas territories status quo

For the status of Greenland, the Isle of Man, and the Canary islands, amongst others, see the article on Special member state territories and their relations with the EU.

Economic status

Currently (May 2004) the EU, considered as a unit, has the largest economy in the world, with a 2002 GDP of 9.613·10¹² euro. The United States, by comparison, has the largest GDP of a single country - 10.450·10¹² dollars (or 8.782·10¹² euro at the current exchange rate of $1.19 per euro). The European Union continues to enjoy a significant trade surplus, as opposed to the widening trade deficit being experienced by the US. However, as of 2004 the European Union has generally been suffering stagnant economic growth and low employment (averaged across the Union).

The EU economy is expected to grow further over the next decade as more countries join the union - especially considering that the new States are usually poorer than the EU average, and hence the expected fast GDP growth will help achieve the dynamic of the united Europe. However, GDP per capita of the whole Union will fall over the short-term. In the long-term, the EU's economy suffers from significant demographic challenges, with a below-replacement birth rate.

Standard of living

Below are two graphs showing, respectively, the GDP (PPP) per capita of each of the 25 member states, and the percentage of the EU average GDP (PPP) per capita. This can be used as a rough gauge to the relative standards of living among member states. For the second graph, a value of 100 corresponds to a GDP (PPP) per capita equal to the EU average. For example, if a country's ranking is 94, it means their GDP (PPP) per capita is 94% of the EU average.

File:EU GDP pc.png

Main policies

As the changing name of the European Union (from European Economic Community to European Community to European Union) suggests, it has evolved over time from a primarily economic union to an increasingly political one. This trend is highlighted by the increasing number of policy areas that fall within EU competence: political power has tended to shift upwards from the Member States to the EU.

This picture of increasing centralisation is counter-balanced by two points.

Firstly, some Member States have a domestic tradition of strong regional government. This has led to an increased focus on regional policy and the European regions. A Committee of the Regions was established as part of the Treaty of Maastricht.

Secondly, EU policy areas cover a number of different forms of co-operation.

• Autonomous decision making: Member States have granted the European Commission power to issue decisions in certain areas such as competition law, State Aid control and liberalisation.
• Harmonisation: Member State laws are harmonised through the EU legislative process, which involves the European Commission, European Parliament and Council of Ministers. As a result of this European Union Law is increasingly present in the systems of the Member States.
• Co-operation: Member States, meeting as the Council of Ministers agree to co-operate and co-ordinate their domestic policies.

The tension between EU and national (or sub-national) competence is an enduring one in the development of the European Union. (See also Intergovernmentalism vs. Supranationalism (below), Euroscepticism.)

All prospective members must enact legislation in order to bring them into line with the common European legal framework, known as the Acquis Communautaire. (See also European Free Trade Association (EFTA), European Economic Area (EEA) and Single European Sky).

Single market: internal aspects

• Free trade of goods and services among member states (an aim further extended to three of the four EFTA states by the European Economic Area, EEA)
• A common EU competition law controlling anti-competitive activities of companies (through antitrust law and merger control) and Member States (through the State Aids regime).
• The Schengen treaty allowed removal of internal border controls and harmonisation of external controls between its member states. This excludes the UK and Ireland, which have derogations, but includes the non-EU members Iceland and Norway.
• Freedom for citizens of its member states to live and work anywhere within the EU, provided they can support themselves (also extended to the other EEA states).
• Free movement of capital between member states (and other EEA states).
• Harmonisation of government regulations, corporations law and trademark registrations.
• A single currency, the Euro (excluding the UK, and Denmark, which have derogations). Sweden, although not having an specific opt-out clause, has not joined the ERM II, voluntarily excluding itself from the monetary union.
• A large amount of environmental policy co-ordination throughout the Union.
• A Common Agricultural Policy and a Common Fisheries Policy.
• Common system of indirect taxation, the VAT, as well as common customs duties and excises on various products.
• Funding for the development of disadvantaged regions (structural and cohesion funds).
• Funding for research.

Single market: external aspects

• A common external customs tariff, and a common position in international trade negotiations.
• Funding for programmes in candidate countries and other Eastern European countries, as well as aid to many developing countries.

Increasing co-operation/harmonisation of other areas

• Freedom for its citizens to vote in local government and European Parliament elections in any member state.
• Co-operation in criminal matters, including sharing of intelligence (through EUROPOL and the Schengen Information System), agreement on common definition of criminal offences and expedited extradition procedures.
• A common foreign policy as a future objective, however this has some way to go before being realised. The divisions between the member states regarding the Iraq crisis in 2003 highlights just how far off this objective could be before it becomes a reality.
• A common security policy as an objective, including the creation of a 60,000-member Rapid Reaction Force for peacekeeping purposes, an EU military staff and an EU satellite centre (for intelligence purposes).
• Common policy on asylum and immigration.

Structure of the European Union

The European union comprises a large number of overlapping legal and institutional structures. This is a result of it being defined by successive international treaties. In recent years, considerable efforts have been made to consolidate and simplify the treaties, culminating with the proposed draft Constitution of Europe.

Legal history and governing treaties

The first pieces of the European project were laid in 1951, with the creation of the European Coal and Steel Community (ECSC) by the Treaty of Paris. This was intended to prevent a war over coal or steel resources. In 1957, the Treaty of Rome was signed, establishing the European Atomic Energy Community (EAEC) and also the European Economic Community (EEC). The former organisation was created with the aim of co-operation between members' nuclear programmes, while the latter was intended to eventually create a single European market. The treaty of Rome was the foundation for later European treaties.

The status of overseas dependencies of the Netherlands (Antilles) and Denmark (Greenland) was regulated by treaty in 1962 and 1984, respectively.

In 1965, the Merger Treaty was signed, to gather together the three institutions of the ECSC, EAEC and EEC. This created the European Commission and Council of Ministers, governing bodies for the institutions. The three institutions would also now share a single budget. This treaty is regarded as the real beginning of the modern European Union. The term European Communities or EC came into use from this time onwards.

Budget and financial provisions underwent amendments in 1970 and 1975, respectively.

The treaty on the European Community was supplemented with successive accession treaties:

• 1972: Denmark, Ireland and United Kingdom (adopted 1973)
• 1979: Greece
• 1985: Spain and Portugal

In 1986 Single European Act became the first of many revisions to the Treaty of Rome. Like many of these treaties, it concerned reforming/refining the operating procedures of the institutions (by now strained with 12 rather than 6 members). Qualified majority voting was extended to new areas and an aim of a single market by 1992 was set.

After the 1992 Maastricht Treaty (Treaty on European Union) the European Communities became known as the European Union. The Maastricht Treaty significantly furthered progress on European Monetary Union (EMU) as well as establishing the "three pillars" framework:

• Pillar 1 - the European Community
• Pillar 2 - the Common Foreign and Security Policy (CFSP)
• Pillar 3 - Justice and Home Affairs

In 1994, the accession treaty of Austria, Finland and Sweden (adopted 1995) further expanded the treaties of the Union.

Once again, in 1997, the framework of the European Union was amended by the Treaty of Amsterdam. This was essentially modifying the previous Treaty on European Union. It was to simplify decision making in addition to further integrating the Common Foreign and Security Policy concept. It also added new provisions on social policy and employment and integrated the Schengen Agreement.

To ready the European Union for further enlargement, the Treaty of Nice was agreed in 2000. The treaty set a cap on the number of MEPs (732) and the European Commission (25). The latter point meant that larger countries would go from two commissioners to one. Qualified majority voting was again extended to more areas, abolishing the national right to veto in some areas. A concept of "enhanced co-operation" was introduced for countries wishing to forge closer links in areas where other states disagreed.

In 2003, the accession treaty of Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia further expanded the treaties of the Union.

Also in 2003, the Draft Treaty establishing a Constitution for Europe was introduced. Originally intended to be in place before the accession of 10 new states on 1 May 2004, it is still pending approval by the Council of Ministers. The constitution is intended to clearly define the competencies held by the European Union and those remaining with the member states. In a manner similar to national constitutions it declares clear principles for the European Union, including a section on human rights.

The three pillars

European Union policies are divided into three main areas, called pillars.

1. The first or 'Community' pillar concerns economic, social and environmental policies.
2. The second or 'Common Foreign and Security Policy' (CFSP) pillar concerns foreign policy and military matters.
3. The third or 'Police and Judicial Co-operation in Criminal Matters' (PJCC) pillar concerns co-operation in the fight against crime.

Within each pillar, a different balance is struck between the supranational and intergovernmental principles. Supranationalism is strongest in the first pillar, while the other two pillars function along more intergovernmental lines. In the CFSP and PJCC pillars the powers of the Parliament, Commission and European Court of Justice with respect to the Council are significantly limited, without however being altogether eliminated. The balance struck in the first pillar is frequently referred to as the "community method", since it is that used by the European Community.

Origin of the three pillars structure

The pillar structure had its historical origins in the negotiations leading up to the Maastricht treaty. It was desired to add powers to the Community in the areas of foreign policy, security and defence policy, asylum and immigration policy, criminal co-operation, and judicial co-operation.

However, some member-states opposed the addition of these powers to the Community on the grounds that they were too sensitive to national sovereignty for the community method to be used, and that these matters were better handled intergovernmentally. To the extent that at that time the Community dealt with these matters at all, they were being handled intergovernmentally, principally in European Political Co-operation (EPC).

As a result, these additional matters were not included in the European Community; but were tacked on externally to the European Community in the form of two additional 'pillars'. The first additional pillar (Common Foreign and Security Policy, CFSP) deal with foreign policy, security and defence issues, while the second additional pillar (JHA, Justice and Home Affairs), dealt with the remainder.

Recent amendments in the treaties of Amsterdam and Nice have made the additional pillars increasingly supranational. Most important among these has been the transfer of policy on asylum, migration and judicial co-operation in civil matters to the Community pillar, effected by the Amsterdam treaty. Thus the third pillar has been renamed Police and Judicial Co-operation in Criminal Matters, or PJCC. The term Justice and Home Affairs is still used to cover both the third pillar and the transferred areas.

The role of the European Community within the Union

The term European Community (or Communities) was used for the group of members prior to the establishment of the European Union. At present, the term continues to have significance, but in a different context. The "European Community" is one of the three pillars of the European Union, being both the most important pillar and the only one to operate primarily through supranational institutions. The other two pillars – Common Foreign and Security Policy, and Police and Judicial Co-operation in Criminal Matters, are looser intergovernmental groupings. Confusingly, these latter two concepts are increasingly administered by the Community (as they are built up from mere concepts to actual practice).

What most people think of as the European Union is essentially the European Community. The Community is an actual body, including the European institutions (European Parliament, Council of Ministers, European Commission), whilst the European Union is a less tangible grouping of institutions and agreements.

Intergovernmentalism vs. supranationalism

A basic tension exists within the European Union between intergovernmentalism and supranationalism. Intergovernmentalism is a method of decision-making in international organisations where power is possessed by the member-states and decisions are made by unanimity. Independent appointees of the governments or elected representatives have solely advisory or implementational functions. Intergovernmentalism is used by most international organisations today.

An alternative method of decision-making in international organisations is supranationalism. In supranationalism power is held by independent appointed officials or by representatives elected by the legislatures or people of the member states. Member-state governments still have power, but they must share this power with other actors. Furthermore, decisions are made by majority votes, hence it is possible for a member-state to be forced by the other member-states to implement a decision against its will.

Some forces in European Union politics favour the intergovernmental approach, while others favour the supranational path. Supporters of supranationalism argue that it allows integration to proceed at a faster pace than would otherwise be possible. Where decisions must be made by governments acting unanimously, decisions can take years to make, if they are ever made. Supporters of intergovernmentalism argue that supranationalism is a threat to national sovereignty, and to democracy, claiming that only national governments can possess the necessary democratic legitimacy. Intergovernmentalism has historically been favoured by France, and by more Eurosceptic nations such as Britain and Denmark; while more integrationist nations such as Belgium, Germany, and Italy have tended to prefer the supranational approach.

In practice the European Union strikes a balance between two approaches. This balance however is complex, resulting in the often labyrinthine complexity of its decision-making procedures.

Starting in March 2002, a Convention on the Future of Europe again looked at this balance, among other things, and proposed changes. These changes were discussed at an Intergovernmental Conference (IGC) in December 2003, but no agreement was reached.

The single institutional framework

The three communities, and the three pillars possess a common institutional structure. The European Union has five institutions:

• European Parliament
• European Commission
• European Court of Justice (incorporating the Court of First Instance)
• Council of the European Union
• European Court of Auditors

There are also two advisory committees to the above institutions, which advise them on economic and social (principally relations between workers and employers) and regional issues:

• Committee of the Regions
• Economic and Social Committee

There are also several other bodies to implement particular policies, established either under the treaties or by secondary legislation:

• European Central Bank
• European System of Central Banks
• European Investment Bank
• European Investment Fund
• Office for Harmonisation in the Internal Market
• European Environment Agency

Finally the European Ombudsman watches for abuses of power by EU institutions.

See also

• List of European Union-related topics
• Citizenship
• Enlargement of the European Union
• European flag
• European Union Law
• Europhilia
• Euroscepticism
• History of the European Union
• Official Journal of the European Communities
• Pro-European
• United States of Europe

• Trade bloc
• Value-added tax
• Eurodicautom

External links

The European Union On-Line

Official EU website, europa.eu.int, in the official languages. Some subpages:

• European Commission - The EU executive arm
• EU Treaties
• EU Enlargement
• EU Policy on China
• European Commission - Maps of Europe

• press conferences and speech audio (MP3 and RealAudio).

Separate EU institution websites

• EU in the USA - Official site of the EU delegation to the US
• European Central Bank - Information on the Eurozone

Other sites

• Dadalos Basic Course on the EU
• EU Observer - Newssite focusing on the EU
• Euronews - Multilingual public TV news channel run by ITN
• European Union Banknotes
• EU Insignia
• ZNet Commentary: Israel in the EU?
• EUBusiness.com - Profile of the enlarged Union