European Union

The European Union is a group of 28 countries that operate as a cohesive economic and political block.

19 of these countries use EURO as their official currency. 9 EU members (Bulgaria, Croatia, Czech
Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom) do not use the euro.

The EU grew out of a desire to form a single European political entity to end centuries of warfare among
European countries that culminated with World War II and decimated much of the continent.

The EU has developed an internal single market through a standardised system of laws that apply in all
member states in matters, where members have agreed to act as one.

Goals

Promote peace, values and the well-being of all citizens of EU.

Offer freedom, security and justice without internal borders
Sustainable development based on balanced economic growth and price stability, a highly
competitive market economy with full employment and social progress, and environmental
protection
Combat social exclusion and discrimination
Promote scientific and technological progress
Enhance economic, social and territorial cohesion and solidarity among EU countries
Respect its rich cultural and linguistic diversity
Establish an economic and monetary union whose currency is euro.

History

After World War II, European integration was seen as a cure to the excessive nationalism which
had devastated the continent.
In 1946 at the University of Zurich, Switzerland, Winston Churchill went further and advocated
the emergence of a United States of Europe.
In 1952, European Coal and Steel Community (ECSC) was founded under Treaty of Paris
(1951) by 6 countries called Six (Belgium, France, Germany, Italy, Luxembourg and the
Netherlands) to renounce part of their sovereignty by placing their coal and steel production in a
common market, under it.

European Court of Justice (called "Court of Justice of the European Communities" until
2009) was also established in 1952 under Paris Treaty.
European Atomic Energy Community (EAEC or Euratom) is an international organisation
established by the Euratom Treaty (1957) with the original purpose of creating a specialist
market for nuclear power in Europe, by developing nuclear energy and distributing it to its member
states while selling the surplus to non-member states.

It has same members as the European Union and is governed by the European Commission
(EC) and Council, operating under the jurisdiction of the European Court of Justice.
European Economic Community (EEC) was created by the Treaty of Rome (1957). The
Community's initial aim was to bring about economic integration, including a common market and
 customs union, among its founding members (Six).

It ceased to exist by Lisbon Treaty-2007 and its activities were incorporated in EU.
Merger Treaty (1965, Brussels) in which an agreement was reached to merge the three
communities (ECSC, EAEC, and EEC) under a single set of institutions, creating the European
Communities (ECs).

The Commission and Council of the EEC were to take over the responsibilities of its
counterparts (ECSC, EAEC) in other organisations.
The ECs initially expanded in 1973 when Denmark, Ireland, the United Kingdom became members.
Greece joined in 1981, Portugal and Spain following in 1986.
Schengen Agreement (1985) paved the way for the creation of open borders without
passport controls between most member states. It was effective in 1995.
Single European Act (1986): enacted by the European Community that committed its member
countries to a timetable for their economic merger and the establishment of a single European
currency and common foreign and domestic policies.
The Maastricht Treaty-1992 (also called the Treaty on European Union) was signed on 7
February 1992 by the members of the European Community in Maastricht, Netherlands to further
European integration. It received a great push with the end of the Cold War.

European Communities (ECSC, EAEC, and EEC) incorporated as European Union.

European citizenship was created, allowing citizens to reside in and move freely between
Member States.
A common foreign and security policy was established.
Closer cooperation between police and the judiciary in criminal matters was agreed.
It paved the way for the creation of a single European currency – the euro. It was the
culmination of several decades of debate on increasing economic cooperation in Europe.
It established the European Central Bank (ECB).
It enabled people to run for local office and for European Parliament elections in the
EU country they lived in.
A monetary union was established in 1999 and came into full force in 2002 and is composed of
19 EU member states which use the euro currency. These are Austria, Belgium, Cyprus, Estonia,
Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Portugal, Slovakia, Slovenia, and Spain.
In 2002, Treaty of Paris (1951) expired & ECSC ceased to exist and its activities fully
absorbed by the European Community (EEC).
The Treaty of Lisbon 2007:
European Community (now composed only of EEC, EAEC, as ECSC already ceased in 2002)
was ceased and its activities incorporated in EU.
EAEC is only remaining community organization legally distinct from the European Union
(EU), but has the same membership, and is governed by many of the EU's institutions.
Euro Crisis: The EU and the European Central Bank (ECB) have struggled with high sovereign
debt and collapsing growth in Portugal, Ireland, Greece and Spain since the global financial market
collapse of 2008. Greece and Ireland received financial bailouts from the community in 2009,
which were accompanied by fiscal austerity. Portugal followed in 2011, along with a second Greek
bailout.
Multiple rounds of interest rate cuts and economic stimulus failed to resolve the problem.
Northern countries such as Germany, the United Kingdom and the Netherlands increasingly
resent the financial drain from the south.
In 2012, the EU received the Nobel Peace Prize for having "contributed to the advancement of
peace and reconciliation, democracy, and human rights in Europe.
Brexit: In 2016, a referendum (called Brexit) was held by U.K. government, and the nation voted
to leave the EU. Now the process is under UK Parliament for formal withdrawal from EU.

Governance

European Council:

It is a collective body that defines the European Union's overall political direction and
 priorities.
It comprises of the heads of state or government of the EU member states, along
with the President of the European Council and the President of the European
Commission.
The High Representative of the Union for Foreign Affairs and Security Policy also
takes part in its meetings.
Established as an informal summit in 1975, the European Council was formalised as an
institution in 2009 upon the entry into force of the Treaty of Lisbon.
The decisions of its summits are adopted by consensus.
European Parliament: It is the only parliamentary institution of the European Union (EU) that is
directly elected by EU citizens aged 18 years or older. Together with the Council of the
European Union (also known as the 'Council'), it exercises the legislative function of the EU.

European Parliament does not possess as much legislative power as its member countries’
parliaments do.
Council of the European Union: It is part of the essentially bicameral EU legislature (the other
legislative body being the European Parliament) and represents the executive governments
(Minister) of the EU's member states.

In the Council, government ministers from each EU country meet to discuss, amend and
adopt laws, and coordinate policies. The ministers have the authority to commit their
governments to the actions agreed on in the meetings.
European Commission (EC): It is an executive body of the European Union, responsible for
proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-
day business of the EU.

The Commission operates as a cabinet government, with 28 members of the Commission.

There is one member per member state. These members are proposed by member
countries and European Parliament gives final approval on them.
One of the 28 members is the Commission President proposed by the European Council
and elected by the European Parliament.
The Commission is divided into departments known as Directorates-General (DGs) that
can be likened to departments or ministries is headed by a director-general who is
responsible to a commissioner.
High Representative (HR) of the Union for Foreign Affairs and Security Policy is
appointed by the European Council by voting and The President of the EC must be in
agreement with the decision. HR is charged with shaping and carrying out the EU's foreign,
security and defence policies.
European Court of Auditors (ECA): It investigates the proper management of finances within
both the EU entities and EU funding provided to its member states.

It can refer unresolved issues to the European Court of Justice to arbitrate on any alleged
irregularities.
ECA members are appointed by the Council, after consulting the Parliament, for renewable
6-year terms.
The Court of Justice of the European Union (CJEU): It interprets EU law to make sure it is
applied in the same way in all EU countries, and settles legal disputes between national
governments and EU institutions.

It can also be approached by individuals, companies or organisations to take action against

an EU institution, if they feel their rights are infringed under EU system.
Each judge and advocate general is appointed jointly by national governments
(member country).
It is located in Luxembourg.
The European Central Bank (ECB): It is the central bank for the euro and administers monetary
policy within the Euro zone, which comprises 19 member states of the European Union.

Governing Council – It is the main decision-making body of ECB. It consists of the Executive
Board plus the governors of the national central banks from euro zone countries.
 Executive Board – It handles the day-to-day running of the ECB. It consists of the ECB
President and Vice-President and 4 other members appointed by national governments of
euro zone countries.
Sets the interest rates at which it lends to commercial banks in the euro zone, thus
controlling money supply and inflation.
Authorises production of euro banknotes by euro zone countries.
Ensures the safety and soundness of the European banking system.
It is located in Frankfurt (Germany).
The European system of financial supervision (ESFS): It was introduced in 2010. It consists
of:

the European Systemic Risk Board (ESRB)

3 European supervisory authorities (ESAs):
the European Banking Authority (EBA)
the European Securities and Markets Authority (ESMA)
the European Insurance and Occupational Pensions Authority (EIOPA)

Functions

EU’s law and regulation is meant to create a cohesive economic entity of its countries, so that
goods can flow freely across the borders of its member nations, without tariffs, with the ease
of one currency, and the creation of one enlarged labour pool, which creates a more efficient
distribution and use of labour.
There is a pooling of financial resources, so that member nations can be "bailed out" or lent money
for investment.
Union's expectations in areas such as human rights and the environment have political
implications for member countries. Union can exact a heavy political cost such as severe
cutbacks and an austerity budget on its members as a condition of giving aid.
This is a great experiment, really, in cooperation amongst nations, who wish to be
economically unified, ceding as little political and national power as possible.
Trade

Free trade among its members was one of the EU's founding principles. This is possible
thanks to the single market. Beyond its borders, the EU is also committed to
liberalising world trade.
The European Union is the largest trade block in the world. It is the world's biggest exporter
of manufactured goods and services, and the biggest import market for over 100 countries.
Humanitarian aid

The EU is committed to helping victims of man-made and natural disasters worldwide and
supports over 120 million people each year.
EU and its constituent countries is the world's leading donor of humanitarian aid.
Diplomacy and security

The EU plays an important role in diplomacy and works to foster stability, security and
prosperity, democracy, fundamental freedoms and the rule of law at international level.

Challenges & Reforms

It is no longer self-evident that all old member states will stay in the Union. The Treaty of Lisbon
gave the members the right to leave the EU. The financial crisis has hit Greece so hard that
many people have predicted for a long time that the country will exit from the Union.
Layoffs, redundancies and migration of jobs to countries where labour is cheap affect the daily
lives of European citizens. The EU is expected to find solutions to economic problems and
employment.
There is also demand for standard labour agreements on terms of employment and working
conditions that would apply across Europe and even worldwide. As a member of the World Trade
Organisation, the European Union is in a position to influence developments worldwide.
EU is a global leader in the development of Key Enabling Technologies (KETs). However, EU’s
 record in translating this knowledge advantage into marketable products and services doesn't
match this. KETs-related manufacturing is decreasing in the EU and patents are increasingly being
exploited outside the EU.
Europe is experiencing a renaissance of national sovereignty supported by a nationalistic turn
of public opinion and represented by parties on both ends of the political spectrum. Popular
disaffection toward EU membership is fuelled by the contemporaneous occurrence of two shocks,
the economic and the migration crises.
USA, by withdrawing from the Paris climate change deal, by pulling out of the Joint
Comprehensive Plan of Action (JCPOA) on Iran’s nuclear programme, and by attacking the
integrity of the international trading system through the unilateral imposition of tariffs,
has called into question Europeans’ formerly unshakeable faith in diplomacy as a way to resolve
disagreements and to protect Europe.
European leaders now fear that the transatlantic security guarantee will centre not on
alliances and common interests but purchases of American technology and materiel.
Like the United States, the EU has been forced to reconsider its relationship with a more assertive
Russia with implications for European security and stability. The EU has sought to support
Ukraine's political transition, condemned Russia's annexation of Crimea in March 2014, and
strongly urged Russia to stop backing separatist forces in eastern Ukraine.

Democratic regression in Ukraine combined with a hardening attitude in Moscow imposes

constraints on the Ukrainian government’s freedom of maneuver in pursuing its European
Union membership.
Brexit: EU has imposed too many rules on business and charged billions of pounds a year in
membership fees for little in return.

The EU added eight eastern European countries in 2004, triggering a wave of

immigration that strained public services. In England and Wales, the share of foreign-born
residents had swelled to 13.4 percent of the population by 2011, roughly double the level
in 1991.
Brexit supporters wanted Britain to take back full control of its borders and reduce the
number of people coming here to live and/or work.
They argued that the EU is morphing into a super-state that increasingly impinges on
national sovereignty. Britain has global clout without the bloc, they said, and can
negotiate better trade treaties on its own.
Withdrawal from the EU is governed by Article 50 of the Treaty on European Union.
A deal between UK & EU that gives it control over immigration and also preferential
access to the EU’s tariff-free single market of 500 million people (UK), the economic
backbone of the world’s largest trading bloc is rejected by Germany & other EU leaders.

EU & India

The EU works closely with India to promote peace, create jobs, boost economic growth and
enhance sustainable development across the country.
As India graduated from low to medium income country (OECD 2014), the EU-India cooperation
also evolved from a traditional financial assistance type towards a partnership with a focus
on common priorities.
At the 2017 EU-India Summit, leaders reiterated their intention to strengthen cooperation on the
implementation of the 2030 Agenda for Sustainable Development and agreed to explore the
continuation of the EU-India Development Dialogue.
The EU is India's largest trading partner, accounting for €85 billion (95 billion USD) worth of trade
in goods in 2017 or 13.1% of total India trade, ahead of China (11.4%) and the USA (9.5%).
The EU's share in foreign investment inflows to India has more than doubled from 8% to 18% in the
last decade, making the EU the first foreign investor in India.
EU foreign direct investment stocks in India amounted to €73 billion in 2016, which is significant
but way below EU foreign investment stocks in China (€178 billion).
INDIA-EU Bilateral Trade and Investment Agreement (BTIA): It is a Free Trade Agreement between
India and EU, which was initiated in 2007. Even after a decade of negotiations, India and EU have
failed to resolve certain issues which have led to a deadlock.
 "Data Secure" status not granted by EU affecting prospects of India’s IT-enabled exports.
Presence of non-tariff barriers on Indian agricultural products in the form of sanitary
and phyto-sanitary(SPS) measures which are too stringent and enable the EU to bar many
Indian agricultural products from entering its markets.
EU wants India to liberalise accountancy and legal services. India denies on the
ground of already shortage of jobs.
EU demands tax reduction on wines and spirits but in India these are regarded as ‘sin
goods’ and the states which derive huge revenue from liquor sales would be reluctant to
cut taxes.
Reduction of taxes on automobiles not acceptable to India as its own automobile
industry would not be able to match the competition from EU automobiles.
India has rejected an informal attempt by the European Union (EU) to work towards a
global investment agreement at the World Trade Organisation (WTO)-level that would
incorporate a contentious Investor-State Dispute Settlement (ISDS) mechanism which will
allow corporations to take sovereign governments to international arbitration. The ISDS
mechanism permits companies to drag governments to international arbitration without
exhausting the local remedies and claim huge amounts as compensation citing losses
they suffered due to reasons, including policy changes.
The non-tariff barriers in pharmaceuticals that EU has imposed include requirement of
WTO—Good Manufacturing Practice certification, import bans, antidumping measures and
pre-shipment inspection among others.
India has cancelled most individual bilateral investment agreements with EU
member states on grounds that they were outdated. By doing this India is putting
pressure on EU to sign BTIA on favouring terms.

Conclusion

Evolution of EU has roots in looking for an integration of divided Europe because of excessive nationalism
over a long period of time which also witnessed two world wars. It has played an important role in
improving economic conditions and raising living standard of people in weaker members of group.

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