The European Union: A Beginner's Guide

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What is the European Union?

Why would any country want to be subject to rules and decisions that are taken in an arena they cannot control? Today there are a number of examples throughout the world where countries have joined together to form a common organisation. This can be the result of regional concerns, as in the case of the African Union (AU) or the Association of South-East Asian Nations (ASEAN). In other instances, there might be common concerns that cut across regional boundaries. The most obvious example is the United Nations (UN). With a membership of 193 countries, it represents more or less every country in the world.

The European Union (EU) is different from these organisations. From Beijing to Berlin and Lima to London, the policies and decisions that are taken by the EU are of relevance to governments, businesses and individuals. If you live in any of the twenty-seven EU member states the reality is that approximately half of all the new laws that are implemented in your country with an economic focus will have originated from decisions taken by the EU. Non-EU countries do not escape. Children’s toy manufacturers in China have to adhere to strict EU controls on the materials used for production. Computer software manufacturers in the United States of America (US) need to be aware of EU rules on fair competition.

These rules do not just materialise in some miraculous way from the predominantly Brussels-based EU institutions. Governments, companies and individuals undertake lobbying to ensure that their views are taken into consideration. In many instances, expert opinion is needed from these sources. This can vary from an eminent scientist, to the views of pressure groups such as Greenpeace, and from trade unions to multinational corporations (MNCs) such as Microsoft. Thus, while announcements that ‘Brussels has decided’ might be true, the final outcome will usually have been subject to a great deal of discussion. Member state governments are at the centre of this process. This is through their role in the EU decision-making structures as well as the fact that they are often charged with implementing and monitoring EU decisions.

The need for such EU rules can nevertheless provoke a great deal of questioning. Newspaper headlines in Europe often scream ‘get us out of Europe’. In non-EU countries headlines frequently criticise EU trade rules. But we have to remind ourselves that there are often very good reasons why such rules and policies do exist. As the EU is the world’s greatest importer and exporter of goods, it is sensible for there to be common standards governing the quality of these goods. Otherwise producers inside and outside the EU could be tempted to produce goods of a lower quality and price. Rules are aimed at protecting consumers as well as attempting to ensure that producers face a level playing field. Sometimes the EU does not make the right decisions. EU policies can be too wide-sweeping in their remit, failing to take fully into consideration the views of all parties. Concerns about the impact of using chemicals in manufacturing industries can result in blanket bans that do not always take into account the fact that the conditions and necessity of use might vary between industries.

At the heart of the EU there is a tension between its need to provide broad standards and the desire of individuals, organisations, companies and governments to seek variance from these standards. This often results in a considerable degree of friction between the local level of the member state and the broader EU level. Reports from the European Commission, which is the EU institution responsible for overseeing the application of EU policies, regularly highlight variation in the implementation of EU policies among the member states.

For example, some member states, such as Britain, often adopt new EU rules with a greater zest than others, such as Greece, and implement policies at the national level that go beyond what is required from the EU. This process, which is referred to as ‘gold-plating’, can actually undermine efforts to harmonise policies at an EU level. These refinements to EU policies consequently result in additional costs for citizens and businesses that can put them at a competitive disadvantage when compared with other member states. And while a government may consider that there is a perfectly good reason for these additions, criticism can often be targeted towards the EU rather than the member state government at the time of implementation. In this context, Britain’s lack of enthusiasm for many initiatives that deepen European integration belies the tendency for its officials and ministers to be extremely efficient in implementing these policies. Other countries such as Italy and Spain can have a more high profile public commitment to European integration, but can drag their feet when it comes to implementation.

Whatever variances exist, it is evident that EU member states face common challenges, from fighting global terrorism to conducting trade negotiations with the likes of China and America, and from dealing with an ageing population to tackling massive public and private levels of debt. In responding to these challenges it is generally acknowledged that the voice of each of the twenty-seven EU member states is stronger and more influential at a global level when it is presented as an EU viewpoint rather than a national viewpoint. This particularly applies to small member states such as Cyprus, Estonia, Latvia, Lithuania, Luxembourg and Malta. All have small populations and as individual countries do not exercise significant influence at the global level. For example, Luxembourg is geographically roughly the same size as the US state of Rhode Island. By contrast, Germany, France, Italy, Poland, Spain and Britain are more influential countries that are able to exercise influence at the global level. But even the largest of the EU member states, Germany, is dwarfed by China, both on economic and population comparisons. Germany’s population of approximately 82 million people is less than a tenth of China’s one billion. And even if you add the population of all the EU member states together it is noticeable that they are still dwarfed by the likes of China and India.

Frustrations of membership

Within the EU there continues to be much debate among populations as to whether their country would be better off outside the EU. It is a discussion that is not just the preserve of the large member states that are capable of exercising significant global influence by virtue of the size of their economies and the reach of their political power. Indeed, one of the most striking factors is that many small member states have significant sections of their population who also think that their country would be better off outside the EU, given that EU rules often limit the ability for decisions to be taken at the national level.

One of the reasons why such frustrations exist is that the EU requires member states to compromise in order to achieve consensus at the European level. This inevitably means that not everyone gets what they want, with member state governments often having to implement policies that they are opposed to. This was without doubt a less complicated process when the EU was founded in the 1950s with just six member states and when the viewpoints of the governments and peoples of these member states were relatively similar. Today the sheer size of the EU inevitably means that reaching a compromise is a more complex matter.

Enlarging the European Union

Note: On 3 October 1990 Germany was reunified as a result of East Germany joining West Germany. Although this was technically not an enlargement of the EU in the context of adding a member state, it was nevertheless a process of EU enlargement.

On joining the EU all member states agree to decisions in certain policy areas being taken at an EU level rather than at a national level. EU membership also requires countries to make reforms to their economic and political structures to ensure that they are ‘fit’ to join. This has proved to be a challenge for poorer and less developed countries. The accession of ten new member states from post-Communist Europe to the EU in 2004 and 2007 has been particularly challenging because the cost of economic reforms, such as opening up sectors of the economy to foreign competition and removing government financial support to businesses, has come at a time of constraints on the EU budget. This has meant that there has been less EU financial support available to assist the smoothing out of these economic difficulties, which has often resulted in higher levels of unemployment. An inevitable consequence of this has been that the governments of these countries have faced higher levels of scepticism from their populations about the benefits of EU membership.

A loss of national control is regularly criticised by those who oppose the EU. Eurosceptics argue that the EU interferes too much with the national way of life in the member states. Many Eurosceptics even go as far as to make the case for withdrawal. And while on balance most commentators suggest that the benefits of EU membership outweigh any potential costs, that is not to say that the EU is without its critics. For example, the 2008 financial crisis that has so severely affected the global economy led many people to reappraise the extent to which EU membership and in particular the euro as the single currency is of benefit to their own nation.

The financial crisis exposed a fundamental problem with the euro in that it was not directly linked to the collection of taxes in the member states. This created a vacuum that resulted in a crisis of EU leadership, whereby the European Central Bank (ECB), which controls the single currency, turned towards the decisions of the central banks and governments of EU member states to set national policies to control economic policy, while national governments looked to the ECB to provide economic stability. If we rewind to the launch of the euro as an electronic currency on 1 January 1999 (it became legal tender on 1 January 2002), at that time it was evident that some EU member states considered that the euro offered a panacea for what had other otherwise been volatile or weak national currencies. This was certainly the view taken by Portugal, Ireland, Italy, Greece and Spain. But it could be argued that rather than providing a beacon of stability, the euro has locked these countries into an economic policy that is not controlled at a national level.

The end result was that the governments of these countries were positioned between the proverbial rock and a hard place. On the one hand they hankered after a return to their pre-euro currency, giving them the ability to control economic policy at a national level, such as the setting of interest rates. On the other hand, they recognised that any departure would be a formal sign of weakness that would in turn lead to greater instability at a national level as investors flee to safe havens in other countries. Governments in Athens and Dublin have been faced with a double-edged sword scenario. They seemed unable to ditch the euro because the cost of breaking up would be enormous and yet staying in the euro meant that they had to swallow significant doses of EU medicine to stabilise their economy. Therein lies the dilemma of membership of the eurozone.

What would happen if a country decided to leave the EU? Technically Greenland is the only country that has left the EU when it gained independence from Denmark in 1982. When this happened it was hardly earth-shattering news. Greenland was an overseas territory of Denmark and as such was not a member state. But it would be an altogether different matter if one of the twenty-seven member states were to leave the EU. Back in 1975 the British Labour government led by Prime Minister Harold Wilson held a national referendum on Britain being a member of what was then known as the European Economic Community (EEC). This was a calculated move by Wilson, who wanted to silence divisions on Europe among his government as well as among the electorate. When the electorate spoke, 67% voted in favour of membership. But the issue of Britain’s membership was not resolved and to this day there continues to be a strong undercurrent of opposition to the EU.

It would be fanciful to think that the likes of Britain, France, Germany or any other EU member state would be able to act in a carefree manner if it left the EU. All of these countries would still be affected by EU policies and would have to trade with the remaining member states. But they would trade at a competitive disadvantage. Their goods and services would be subject to import taxes. Thus, while withdrawal might create a sense of greater national identity and lead to a view that sovereignty has been restored to the nation state, such countries would still be influenced and shaped by EU rules without actually being able to exert any influence on them.

In evaluating the reason why twenty-seven European governments have decided to give up whole chunks of their sovereignty to become EU member states, one of the most regularly cited points is that membership is equated with peace and security. This is a view that is rooted in the horrors of the Second World War, which claimed over 60 million lives, two-thirds of which were civilians. After the war countries such as France and Germany decided to work together to end the national conflicts that resulted in two world wars.

One of the most basic points is that the EU provides a mechanism to unite the peoples of Europe. Today it is just as common for British citizens to go on holiday to France and Spain as it is for them to spend leisure time in their own country. People regularly commute for work-related meetings in other European countries. Many of the companies that people work for operate on a pan-European basis. University students are able to study in other European countries.

REGIONAL INTEGRATION

Regional integration refers to the way in which societies have come together to deal with common issues. The most common aspect of regional integration relates to economic issues, particularly the lowering and removal of customs duties between the member states so as to permit trade to move freely among the specific member states. A customs union requires member states to adopt a common position (or what is often referred to as a common external tariff) in relation to trading with non-member states. In some cases regional integration results in the establishment of formal institutions with policy-making and legal responsibilities. This particularly applies in the case of the EU where the member states have taken a conscious decision to come together and give so-called supranational organisations responsibility for decisions and policies. As a result, the member states have given up an element of national sovereignty.

More than a love–hate relationship?

Despite initiatives that allow European citizens to work freely in other European countries, it is not entirely clear whether over half a century of European integration has actually brought about a common sense of identity and purpose among the citizens of Europe. It is particularly interesting to note the differences in attitudes among the European member states. On a regular basis a sample of citizens in all member states is asked a series of questions by Eurobarometer. This is the EU organisation charged with the task of conducting surveys on a wide variety of subjects relating to European integration. Based on a statistical sample of about a thousand people in each country, one of the most basic questions that are asked is whether people consider EU membership to be a ‘good thing’. Results published by Eurobarometer in August 2010 show that across all EU member states 49% of the respondents considered membership to be a ‘good thing’. This is close to the lowest levels that have been recorded over the previous decade. It is by no means a convincing figure. It also might lead people to think that the rest of the respondents thought EU membership is a ‘bad thing’. This would be the wrong conclusion to make. In fact, only 18% of respondents regarded membership as a ‘bad thing’ in August 2010. This was a 3% increase on the previous year.

A conclusion that can be drawn from these statistics is that there is a trend towards a reduction in the support for EU membership and an increasing scepticism about the benefits of membership. There can be a