EU Trade Bloc Case Study

Question 1

What is the EU?

Answer 1

• It began life as a Common Market in which member nations could trade without paying trade taxes (tariffs) to export goods to other members
• It is now and Economic Union in which nations allow the free movement of goods, services, money and people. These are known as the ‘4 freedoms’.

•It is now the world’s biggest Trading Bloc:
➢The EU has around 450 million citizens/consumers
➢It accounts for 20% of global trade
➢It accounts for 50% of outward global FDI
➢It accounts for 25% of inward global FDI

Question 2

Where is the EU?

Answer 2

• The original 6 members of the EU in 1957 were all in continental western Europe
• Now the EU has 27 members which includes most of western Europe and parts of eastern Europe (former communist countries)

Question 3

When was the EU set up and how has it developed since?

Answer 3

• The EU was set up in 1957. It became known as the EEC (European Economic Community) and as The Common Market in Britain
• The UK joined in 1973 with Denmark and Ireland
• By 2007 the EU had 27 members with Bulgaria and Romania being the latest countries to join. It is now called the European Union (EU)
• In 2016 the UK voted to leave the EU – Brexit.

Question 4

Why have so many nations decided to join the EU?

Answer 4

The EU has always had both political and economic goals:

➢ The key political goal has been for European nations to co-operate politically and live in peace after 2 disastrous world wars
➢ The key economic goal has been for European nations to co-operate economically and so become more prosperous

Question 5

How has the EU tried to meet its goals?

Answer 5

The EU has agreed and developed a range of common policies on political, economic and social goals:

➢These include regional policies to redistribute wealth to the poorest (peripheral) parts of the EU, subsidies to support industrial and agricultural sectors and the social chapter to introduce common working conditions/hours

Question 6

Positive political consequences for those inside the EU?

Answer 6

• Peace and political stability. No more European wars
• A democratic system across the EU in which MEPs are elected to a European Parliament in Strasbourg and Brussels to make decisions about European issues
• Smaller nations like Belgium and Estonia can a larger say in global decisions as they are part of a more powerful social and economic group

Question 7

Negative political consequences for those inside the EU?

Answer 7

• A loss of sovereignty (control) as decisions can be made in centrally in Europe instead of by national governments
• A loss of national democracy as nations may have to introduce laws which they do not agree with for example the laws on maximum hours for junior doctors in the UK
• Smaller regions within larger countries may feel that they are being ignored leading to demands for more federalism or even independence as in Scotland and Spain

Question 8

Positive economic consequences for those inside the EU?

Answer 8

• Europe has become more prosperous as trade barriers between EU countries do not exist. Business can trade without restrictions across the entire EU
• Poorer/peripheral regions such as Western Ireland or industrially depressed urban centres such as South Wales have benefited from the EU regional fund. Between 2007 and 2013 it is estimated that $340 billion (36% of the EU’s budget) was spent in this way
• The Euro could make trade and travel even easier

Question 9

Negative economic consequences for those inside the EU?

Answer 9

• There could be a loss of financial control over a countries economy (especially with the Euro) All members have different economic needs and so might need different policies. This could made some countries less prosperous eg the ‘austerity measures’ in Greece
• Some resources need to be shared such as the UK’s traditional fishing grounds with Spain and Portugal
• Lower wages and costs in new members such as Slovakia may mean the some business (VW and Peugeot) ‘shift eastwards’ leading to unemployment in the west of Europe

Question 10

Positive social consequences for those inside the EU?

Answer 10

• Individuals can move freely across the EU to work, live and travel for pleasure
• Workers rights can be protected through the ‘social chapter’ For example maximum working hours.
• There may be a greater understanding of other peoples and cultures

Question 11

Negative social consequences for those inside the EU?

Answer 11

• Individuals can move freely and easily across the EU to work, live and travel. This could make it easier for those who wish to commit crimes or acts of terrorism.
• The free movement of people could lead to resentment and to more social tension and potential unrest. This could lead to a rise in anti-EU political parties (UKIP in the UK) or even racist political movements (‘Golden Dawn’ in Greece). In June 2016 the UK voted to leave the EU – this is likely to take a minimum of 2 years