European Union 101

Originally published: Jun-23-2008

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by Riki-Lee Ritz
Senior Account Executive
International Department, ABC-Amega Inc.

While most people are at least peripherally aware of the European Union (EU) as an organization, for many, its essential functions and scope remain vague. For those living and working outside of the EU, it is tempting to think of it as being similar to a federal government. While there may be some similarities, the differences amount to a regulatory organization that is totally unique.

EU History/Objective/Motto

The foundation of the European Union has its roots in post-WWII Europe’s desire to secure a lasting peace by creating a bond among nations. Eventually, through a complex series of treaties negotiated throughout the last half century among member nations, we have the EU as it exists today.

According to the Europa portal site of the European Union, the current mission of the EU, includes the following objectives:

• Provide peace, prosperity, and stability for its peoples
• Overcome the divisions on the continent
• Ensure that its people can live safely
• Promote balanced economic and social development
• Meet the challenges of globalization and preserve the diversity of the peoples of Europe
• Uphold the values that Europeans share, such as sustainable development of a sound environment, respect for human rights and the social market economy

It is important to note that the European Union does not replace the national governments of each individual member state. In fact, the EU strives to preserve the individuality of each European country by preserving national sovereignty. Their motto is “United in Diversity” meaning that “Europeans are united in working together for peace and prosperity, and that the many different cultures, traditions, and languages in Europe are a positive asset for the continent”. (Quote taken from Europa website.)

European Union Organization

One of more difficult aspects to grasp about the European Union is its organizational format. The founding treaties and their corresponding amendments define the policy and goals of the EU, as well as its governing structure.

Rather than having a single supreme governing body, several organizations contribute to the administration of the European Union. Often referred to as an institutional triangle, the following bodies serve to maintain and govern the EU:

• Council of the European Union – represents member states and is the European Union’s primary decision making body.
• European Parliament – represents the people and shares legislative and budgetary power with the Council of the European Union.
• European Commission – represents the common interest of the European Union as the main executive body; proposes legislation and ensures that EU policies are properly implemented.

At present, EU policy is divided into three areas of accountability referred to as “pillars”. The objective of these pillars is to balance the responsibility between the supranational community of independent (but jointly appointed) bodies and the intergovernmental power of each member state.

Pillars of European Union

Pillar I represents the European Community and concerns the promotion of economic growth and security, as well as social and environmental policies. The European Community is an independent organization that functions in a supranational capacity within the European Union.

Pillar II fulfills the European Union’s objectives of maintaining a common foreign policy as well as strengthening international security and protecting human rights.

Pillar III carries responsibility for handling cooperation in criminal matters. This includes cooperation between law enforcement bodies, as well as judicial cooperation in civil matters.

The Treaty of Lisbon is currently being negotiated between Member States. If ratified, it will completely change the administration of the European Union. The treaty’s primary objective is to improve the effectiveness of the EU by clarifying its delegation of powers, and to simplify European integration. Enactment of the treaty remains uncertain at this time, as Ireland has recently rejected ratification.

EU Member States

Not every country in Europe is a member of the European Union. In order to become a member, a nation must meet certain treaty-established criteria such as economic prosperity and democratic home rule. Not all European nations have chosen to join the EU, and others fail to meet the necessary qualifications. Some non-member states, however, have committed to at least a few of its practices.

At present, there are twenty-seven nations considered Member States, and three countries are currently seeking candidacy.

European Single Market

One of the more tangible aspects of the European Union is the use of the Euro (EUR) as a common currency among most of the Member States. Although an important factor, the common currency is merely a building block in the development of a single market within the EU.

Creation of a single market includes the objective of guaranteeing four freedoms, including the free movement of goods, capital, people and services within the EU. These freedoms support the single market by: eliminating import and export barriers; easing restrictions on cross-border monetary transactions; allowing free movement of the work force; and, most importantly, creating freedom for companies in EU Member States to establish themselves in other Member States.

The establishment of the single market is one of the primary reasons that the European Union has become such a robust economic power. It is estimated that the EU contributes to nearly 30% of the world’s gross domestic product, which makes it one of the largest economies in the world.

Conclusion

It may be tempting to think of issues involving the EU as only effecting those living within the Member States. As the world’s leading trading power and the United States’ leading trade relationship the EU, however, has the ability to influence both the global economy and international policy. As a result, it is wise to have an understanding of what this economic entity is, how it operates, and how its policies and politics impact the world business and economic stage.

Resources on the European Union

Europa -- Gateway to the European Union

European Commission, Europa website

European Union, BBC News

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This information is provided by ABC-Amega Inc. -- providing 1st and 3rd party commercial collection services since 1929, and collecting in more than 200 countries worldwide. For further information, contact info@abc-amega.com.

Riki-Lee Ritz received a B.A. in French language and literature and is a bilingual account executive in the international department at ABC-Amega. She manages claims in Europe as well as francophone countries in Africa and the Caribbean.