Regional Trade Aggrement (EU) (chap 7) Flashcards
European Union (bodies)
- European Commission
- Council of Ministers (European Council)
- European Parlament
- European Court of Justice
Deepening (EU term)
Closer economics integration
Ex:monetary system
Widening (EU term)
Expanding membership
Single European Act (SEA)
- Elimination of physical barriers (passport and customs control) - the Schengen Agreement
- Eliminations of technical barriers
- Elimination of fiscal barriers
what previous name had the EU?
The European Economic Community (EEC)
- Before the EEC, it was name the European Common Market
- Before, it was the European Coal and Steel Community (ECSC)
what was the propose of the European Coal and Steel Community (ECSC) ?
the propose was to gave access to the German’ coal and steel resources to the other European countries.
history of the creation of the European Coal and Steel Community (ECSC):
After WW2 the Ruhr valley(Germany) had massive reserve of coal that was needed to the restoration of neighbouring countries (allied occupation ).
- Robert Schuman (the French foreign minister) propose a compromise , to share the industries in the area (pooling), and Germany got back the sovereign of the valley
what member had the European Coal and Steel Community (ECSC)?
- france
- West germany
- italy
- the Benelux countries (Belgium, Netherlands , Luxembourg)
what consequence had the success of the European Coal and Steel Community (ECSC)?
- the success of the European Coal and Steel Community (ECSC) lead to proposals for a fuller economic association
what was the Treaty of Rome (1957)?
The creation of EEC (European economic commonwealth) and Eurtotom by the six members of the ECSC
what opposing views had co-existed in the European Union ?
- Promotion of a loose association, a free trade area
2. “Functionalism” ( a. version of USA, United States of Europe)
what the treaty of Rome incorporate? (main)
The principal of Subsidiary:
- the EU had the authority over international level issues such as labour, competition, regional policy, monetary and economic union, research and technology.
in what consist the European commission?
- administer the treaties, EU budget, rules on conflict between countries
- 28 members (1 for country)
- member appointed by national governments
- a president is appointed and allocates responsibility to others member
in what consist the European Council (council of minister)?
- Set policies
- the heads of government meet
- decide the most important issues
- qualified maturity is 74% (260 out 352)
- # of votes per country varies according to population
What is the propose of the European Parliament?
- question members of the council and commission
- it can veto the EU budget
- can pass the vote of no confidence on the commission as a whole
at what period there was more “deepening” in the EU?
50’s-70’s (first wave)
80’s stagnation - Euroclerosis
90’s Europhoria (second wave)
what happens in the second wave of deepening in the EU?
- The Single European act (1987)
2. The Maastricht Treaty (1991)
what was the Delors Report ?
report that propose 300 amendments to the Treaty of Rome
279 were included
What benefits had the Single European Act (SEA)?
- reduced cost from customs and passport check (by eliminating them)
- allowed economies of scale (firms selling to all EU market)
- increased competitiveness as everyone compete in a same market
what was the Maastricht Treaty 1991?
- A social charter, minimum standard for social programs
- A common defence and security policy
- common currency
Conditions of the Optimal Currency Area ? (EU)
- The business cycles sound be closely synchronized
2. There should be free mobility of labour and capital
what criteria were needed before the adoption a common currency? (EU)
- Stable exchange rate, low inflation
- Harmonization of long-term interest rates
- Reduction of the government deficit/ GDP ratio
- Reduction of government debt/GDP ratio
pro and con of Monetary Union?
benefits :
- eliminates cost of conversion ( 0.5% EU GDP)
cost:
- force centrals banks to adopts “One size fits all” policies
- sometimes the business cycles weren’t synchronize
- not complete mobility of labour (language)
widening : what new countries incorporate?
1957 - six original member (rich)
1973 : United kingdom, Ireland , Denmark (rich)
1982-1995: six more (poor)
2004-2007:12 more (poor)
what challenge have the EU?
- The Sovereign Debt Crisis
2. Bretix
Possibles solutions to the Sovereign Debt Crisis?
- Introduction of the eurobonds
- help deficit countries by reducing interest rate
- increase the interest rate for surplus countries - Splitting the eurozone into two currencies
- germany and close ones could leave and created a new Mark Zone
- the remaining members then could depreciate the euro
Fundamentals problems in the Sovereign Debt Crisis(EU):
- The Eurozone was never an optimal currency area
- all the adjustment has been imposed on deficit countries
- north , under consume
- south, over consume
Problems discussed in the Sovereign Debt Crisis (minor problems):
- Economist do not agree that balance budget rule is “sensible” - to hard on the people
- how credible are the rules and actions after violation of the rules (especially by a large country)
alternative models after the Britain leave the EU?
- Norway option
- Canadian option
- WTO option
what is the WTO option in Bretix?
- Not having special relationship with the EU,
- same protection as other member of the World Trade Organization
-common external tariff
what is the Canadian option in Bretix?
- free trade with the EU, except free movement of labour
- no cover financial service (40% British trade with EU)
what is the Norway option in Bretix?
- part of the EEA ( European economic market)
- full access to the EU markets but as an observer does not have a voice in the regulations
- least disruption, still with free movement of labor
hard to see an improvement
what issues expose the referendum previous Bretix?
- immigration
- desicion making from London to Brussels
- General resentment agains globalization
economic cost of Bretix ?
- decrease in exports
- decrease in foreign investment
- posible decline in the status of London (financial sector)
what position the supporters of “deepening” about Bretix?
some feel that could be good:
- U.K opposed to closer integration
- the fall of the status of London(financial sector) may benefits other countries in EU
