The EU

Question 1

features of the EU

Answer 1

• free trade
• common external barriers on imports (especially for agriculture, EU taxes this highly to protect domestic agriculture) eg the Common Agricultural Policy that sets minimum agricultural item price (caused massive excess supply + waste)
• common policies
• free movement of labour + capital

17/27 members adopting Euro + common monetary policy

Question 2

benefits of being EU member

Answer 2

• Free trade: market of 400 million consumers. More jobs, higher incomes, more growth, lower prices
• FDI: Foreign firms want to set up in member states as they have access to other EU countries. employment benefits, technology advancements, exports increase
• Huge market size: more competition so lower prices, more consumer surplus, more choice!
• Contributions to EU budget can be small relative to their GDP eg when UK was in EU, contributions were less than 1% of its GDP
• Free movement of labour: individuals can take jobs abroad, pensioners can retire abroad. Firms can branch out and open factories abroad eg ALDI is german company that set up around EU easily

Question 3

negatives of being EU member

Answer 3

• forced to follow rules and regulations of EU. Small countries like Malta have less voting power. also lots of red tape and regulation to follow for companies so prevents MNCs
• Cost of contribution to EU budget even if you don’t benefit from every policy
• country does not have to be part of EU to get trade benefits eg despite UK leaving in 2020, most goods traded with EU are not subject to tariffs, as long as they meet rules of origin (made mostly in UK/EU)
• high levels of immigration, may conflict with government objectives (migrant drains on benefits…? no proof of this in UK, they have actually increased productivity)