The European Union
The European Union (EU) was formally established when the Maastricht Treaty—whose main architects were Helmut Kohl and François Mitterrand—came into force on November 1, 1993. The European Union is an economic and political union of 27 member states which are located primarily in Europe. Its de facto capital is Brussels. In 2004, the EU saw its biggest enlargement to date when Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined its ranks. On December 9, 2011, Croatia signed the EU accession treaty making it the 28th member state as of July 2013.
The EU operates through a system of supranational independent institutions and intergovernmental negotiated decisions by the member states. Important institutions of the EU include the European Commission, the Council of the European Union, the European Council, the Court of Justice of the European Union, and the European Central Bank. The European Parliament is elected every five years by EU citizens.
The EU has developed a single market through a standardized system of laws which apply to all member states. EU policies aim to ensure the free movement of people, goods, services, and capital; enact legislation in justice and home affairs; and maintain common policies on trade, agriculture, fisheries, and regional development.
With a combined population of over 500 million inhabitants, or 7.3% of the world population, the EU generated the largest nominal world gross domestic product (GDP) of 17.6 trillion US dollars in 2011. This figure represented approximately 20% of the global GDP when measured in terms of purchasing power parity.
The Eurozone and Economy
In 2002, EU notes and coins replaced national currencies in 12 member states. Since then, the eurozone (or Euro Zone) encompasses 17 countries. The monetary policy of theeurozone is governed by the European Central Bank .
Euro Zone Countries
Adopted in 2002, the euro promotes a single market within 17 countries of the EU.
The euro is designed to help build a single market by easing travel of citizens and goods; eliminating exchange rate problems; providing price transparency; creating a single financial market, price stability, and low interest rates; and providing a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone. It is also intended as a political symbol of integration and stimulus for more.
Of the top 500 largest corporations measured by revenue, 161 have their headquarters in the EU. In 2007, unemployment in the EU stood at 7% while investment was at 21.4% of GDP, inflation at 2.2%, and current account balance at −0.9% of GDP. In other words, there was slightly more importing than exporting in the EU. As of August 2012, unemployment in the EU stood at 11.4%.
Political and Legal
The EU operates solely within those competencies conferred on it by the treaties and according to the principle of subsidiary (which dictates that action by the EU should only be taken where an objective cannot be sufficiently achieved by a member state alone). Laws made by the EU institutions are passed in a variety of forms. Generally speaking, they can be classified into two groups: those which come into force without the necessity for national implementation measures, and those which require national implementation measures.
On December 1, 2009, the Lisbon Treaty entered into force and reformed many aspects of the EU. In particular, it changed the legal structure of the EU, merging its three pillars system into a single legal entity provisioned with legal personality, and created a permanent President of the European Council.
The Internal Market
The single market involves the free circulation of goods, capital, people, and services within the EU, and the customs union involves the application of a common external tariff on all goods entering the market. Once goods have been admitted into the market, they cannot be subjected to customs duties, discriminatory taxes or import quotas, as they travel internally. The non-EU member states of Iceland, Norway, Liechtenstein, and Switzerland participate in the single market but not in the customs union.
Free movement of capital is intended to permit movement of investments such as property purchases and the buying of shares between countries. The free movement of persons means that EU citizens can move freely between member states to live, work, study, or retire. This required the lowering of administrative formalities and recognition of professional qualifications of other states.
The free movement of services and of establishment allows self-employed persons to move between member states to provide services on a temporary or permanent basis. While services account for 60% to 70% of GDP, legislation in the area is not as developed as in other areas.