Economic dimensions of European Union

Seminar 10

How did the European integration begin?

began after World War II with initiatives aiming to foster economic cooperation among European countries, notably through the establishment of the European Coal and Steel Community in 1951

What was the primary objective of the European Coal and Steel Community?

To regulate the coal and steel industries among member states to prevent war and promote economic stability.

What was part of the ECSC?

• The “six” member states (Germany, France, Italy, Belgium, the Netherlands, and Luxembourg)

• ECJ, Council and EP were created to oversee the ECSC's operations and ensure compliance among member state

How did the ECSC change?

with signing Treaty of Rome in 1957, which created the European Economic Community and established the four freedoms→ main cause for EU economic success

What does the treaty of Rome entail?

• EEC: tariff dismantling and prohibition of trade restrictions between members

• European Atomic Energy Community (Euratom)

• four freedoms

What other organization got created as response to ECC and by whom?

European free trade association (EFTA) → by no-members

What is the single market program?

• launched by EC president Jacques Delors 1985

• aims to create area without borders to ensure free movement of four goods -> adopted by all member states in 1987

What were the main objectives of the single market?

the removal of physical, technical, and tax barriers, and the liberalization of public procurement markets

What did the single market lead to?

Pressure to non-members to join

→ now: 27 members

What is the EU based on?

Two treaties: Treaties of Rome and Maastricht

What is the Maastricht treaty?

formed the monetary union: EU (entered 1993)

creates single currency, EU citizenship, free movement of capital, strengthened EU in non-economic topics

Why was the Maastricht treaty created?

to end currency crisis

end dominating role of D-Mark and tie in Germany

to strengten international role of EU

What are the four key principles of the Maastricht treaty?

1.        Price Stability as Primary Objective

2.        Independence of the ECB and National Central Banks

3.        Exclusion of Mutual Financial Liability (No Bail-Out Clause)

4. Prohibition of Monetary Financingof government Debt

What trade barriers / trade policy instruments are there?

Tariff barriers & non-trariff barriers

What are tariff barriers?

taxes on imports

What are non-tariff barriers?

rules, regulations, or procedures that make it harder or more costly to import goods — without using taxes

Whats a free trade area (FTA)?

A region without trade barriers (tariff and non-tariff)

What is a customs union?

FTA plus common external tariff for non-members

Describe the stages of economic integration in the EU

The stages include Free Trade Area, Customs Union, Common Market, and Economic Union,

each with increasing levels of integration in terms of:

free trade, common trade policy, free factor mobility, and

common monetary and fiscal policy

What are benefits of deeply integrated markets?

efficient factor allocation through international division of labor and specialization,

economies of scale,

increased competition leading to product and process innovation and technological change,

the acceleration of growth

welfare gains

What are stabilizing measures for the Eurozone crisis 2010?

→ due to financial and banking crisis US

• crisis management measures: fiscal and monetary

• governance reforms (more surveillance)

• banking union (sigle rule book and centralized supervision)