08 - European Integration

Question 1

European Union (EU)

Answer 1

The political and economic organization of 28 countries in Europe

Question 2

History of the EU

Answer 2

1. Free trade area
2. Customs Union
3. Common Market
4. Economic Union
5. Monetary Union
6. Political Union

Question 3

Free trade area (1950s)

Answer 3

A group of countries that remove trade barriers among themselves

Question 4

Customs Union

Answer 4

common external tariffs on non-participating countries

Question 5

Common Market (1993)

Answer 5

Combining customs market permissions plus free movement of goods and peoples

Question 6

Economic union

Answer 6

All “common market” features, but members of an economic union also coordinate and harmonize economic policies

Question 7

Monetary union

Answer 7

Countries sharing a common currency and monetary policy (e.g. the euro)

Question 8

Political union

Answer 8

The integration of political and economic affairs of a region. The EU is NOT a political union.

Question 9

Council of Europe (1949)

Answer 9

• A loose association in which essentially all European countries are members
• Emerged from the Treaty of London
• located in Strasbourg

Question 10

European Conventions on Human Rights

Answer 10

A charter defining human rights in Europe (adopted in 1950)

Question 11

European Court of Human Rights

Answer 11

An international court located in Strasbourg assessing human rights cases in Europe

Question 12

The Council of Europe - Achievements

Answer 12

• Abolition of the death penalty - Strengthening of human rights - Non-discrimination and the fight against racism - Upholding freedom of expression - Gender equality

Question 13

Treaties of Rome (1957)

Answer 13

• Considered the founding date of the EU: March 25, 1957
• Treaties of Rome created the European Economic Community (ECC) and the European Atomic Energy Community (Euratom)
• Strong desire to create institutions that would prevent future wars between the nations of Europe
• Focus was on establishing a customs union with
  
  • a common external tariff
  • and common policies for agriculture, transport, trade and the support of developing countries

Question 14

Copenhagen Criteria

Answer 14

New member criteria to be admitted as members of the EU:

• political criteria: stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities
• economic criteria: a functioning market economy and the capacity to cope with competition and market forces
• administrative and institutional capacity to effectively implement the ability to take on the obligations of membership

Question 15

Process of changing from central plan to a market economy: Processes included

Answer 15

• Central and Eastern Europe (CEE) have experienced a different form of “integration”. While Western Europe established market economies, CEE developed a system of central planning under the Soviet Union
• Processes included:
  
  • ​Economic transition: Changing from central plan to market economy
  • Liberalization: Removal of regulatory restrictions on business
  • Stabilitization: Policies to combat macroeconomic imbalances
  • Privatization: Change of ownership from state to private
• These transition economies have now ascended to become, mostly part of the European Union

Question 17

Four freedoms of the EU single market

Answer 17

1. Free movement of goods (mutual recognitions, harmonized sector, subsidiarity)
2. Free movement of services
3. Free movement of capital.
4. Free moving people (the right of individuals to move freely in the EU to live, work, study or retire)

Question 18

The single market

Answer 18

The single market is about free movements of goods, capital, people and services within the union. It complements the customs union, which secures application of a common external tariff on all imported goods.

Question 19

The principles of harmonization

Answer 19

• Mutual recognition: Products recognized as legal in one country may be sold throughout the EU.
• Harmonized sector: Sectors of industry for which the Eu has created common rules
• Subsidiary: The EU takes action only if it more effective than actions taken at lower levels (national, regional)

Question 20

Optimal currency area

Answer 20

A theory establishing criteria for the oprtimal size of an area sharing a common currency

Question 21

Maastricht Criteria

Answer 21

The Maastricht Criteria established that countries had to accept the monetary union. Countries were required to have:

• annual budget deficits not exceeding 3 per cent of GDP
• public debt under 60 per cent of the GDP
• inflation rates within 1.5 per cent of the three lowest rates in the EU
• long-term interest rates within 2 per cent of the three EU countries with the lowes rate
• exchange rate stability

Question 22

Advantages of Joining the Euro

Answer 22

• reduce currency conversion costs
• facilitate direct price comparisons
• reduction of exchange rate risk
• impose monetary discipline

Question 23

Disadvantages of Joining the Euro

Answer 23

• Unable to implement independent monetary policy
• Limits on fiscal policy, notably deficit spending
• De facto shared responsibility to support weaker member countries
• National politicians blame eurozone instead of addressing their own failings

Question 24

Membership

Answer 24

• Belgium, France, Germany, Luxemburg, Netherlands and Italy were founding members (1958)
• In the 1960s UK, Ireland, Norway and Denmark applied for membership
• Norwegian voters, however, rejected membership in a referendum in 1972 (and again in 1994)
• In the 1980s, Spain, Portugal and Greece joined
• In 1990 former East Germany joined the EU by joining the Federal Republic of Germany (West Germany). Finland, Sweden and Austria joined in 1995

Question 25

Eurozone employment

Answer 25

Even if business cycles are not perfectly aligned, labour mobility can help ease tensions,

• but in Europe labour is less mobile, and labour markets are less flexible
• differences in unemployment are quite persistent
• some argue that the Eurozone has reached its optimal size or is already too large

Question 26

European Council

Answer 26

the asssembly of heads of governments setting overall policy

President of the European Council

• The person chairing the meetings of the European Council

Question 27

European Commission

Answer 27

The executive arm of the EU, similar to a national government.

Directorate General (DG)
A department of the commission, similar to a government ministry

President of the Comission
The head of the EU’s executives, similar to a national prime minister

Question 28

European Parliament

Answer 28

The directly electer represenation of European citizens

Question 29

Councile of the European Union

Answer 29

The decision-making body consisting of ministers from the national governments; it decides by qualified majority voting