European Union Flashcards

1
Q

Institutions

A
European Parliament
Council of EU Ministers
European Commission
Court of Justice
Court of Auditors
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2
Q

Advantages of EU Integration

A

Trade creation among member countries
Economies of Scale with access to larger markets
Reduced import prices
Improvements brought about by increased competition

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3
Q

The Maastricht Treaty

A

Common foreign defence policy
Established economic and monetary union to create a single currency
Grant citizens right to live and work within EC

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4
Q

Implications to Non-Members

A
  • Fortress Europe
  • -Non-EU companies are worried that EU regulations will favour european firms and may impose unfavourable terms to non-EU countries who wanna do business in EU.
  • Opportunities of larger market, reduced trade tariffs, greater labour and capital mobility for companies operating in Europe
  • Abide to rules of EU (exporting firms)
  • Adjust corporate strategies to compete more effectively
  • MNC treat EU as 1 marketplace
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5
Q

Euro

A

Official currency of 17/27 EU member states

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6
Q

Rules for adopting Euro

A
  • Price stability, measured by consumer price inflation rate
  • Sound public finances, measured by government deficit as % of GDP
  • Sustainable public finances, measured by government debt as % of GDP
  • Durability of convergence, measured by long term interest rates
  • Exchange rate stability, measured by deviation from a central rate
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7
Q

Benefits of Euro

A
  • Elimination of exchange rate fluctuations
  • Elimination of various transaction costs and exchange rate
  • Price transparency
  • Broader and more efficient financial market
  • Practical benefits for citizens
  • Saves effort in collections and credit management
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8
Q

Concerns & Risk of Euro

A
  • Elimination of foreign exchange activity will have negative impact on most European banks
  • European stability will be key determinant of success of EMU
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9
Q

Impact of Euro on Asia

A
  • Euro could erode the region’s heavy reliance on US dollar and become the new global trade currency.
  • Stiffer competition in the long run if Europe grows to be more productive.
  • If Euro gains strength, Asian companies may move away from Western to Eastern europe in search for lower labour and production costs.
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10
Q

Impact of Euro on Asia (2)

A
  • In finance, Europe becomes more attractive destination for portfolio investment.
  • Possibility of doing more business in Europe to enjoy economy of scale.
  • Treat EU as one marketplace.
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