European Union Flashcards
1
Q
Institutions
A
European Parliament Council of EU Ministers European Commission Court of Justice Court of Auditors
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
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
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
5
Q
Euro
A
Official currency of 17/27 EU member states
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
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
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
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.
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.