What is the European Union (EU)?

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Definition:

The European Union is a group of 27 countries that share a standard set of economic and political policies.

🤔 Understanding the EU

The European Union is all about integration. It evolved out of the European Economic Community (EEC), which emerged in the aftermath of World War II. The idea was that strong economic ties between European countries would reduce the risk of further political conflict. The EU, as we know it today, replaced the EEC after the signing of the “Maastricht Treaty” in 1993. There are currently 27 EU member states, which follow EU law and are members of a single market, in which people are free to travel and trade without restrictions or tariffs. This makes economic activity more efficient within the bloc and has helped the EU become the world’s second-largest economy. As of March 2020, 19 of the EU member states (known as the Eurozone) share a common currency called the euro. The EU today is much more than an economic union — Members share policies across a wide range of areas, such as health, border control, justice, and climate.

Example

On Jan. 31, 2020, the United Kingdom left the European Union. When the agreed transitional period expires on Dec. 31, 2020, the UK will no longer follow EU law and will not be part of the single market. Unless a new trade deal emerges, the UK will be subject to trade barriers and restrictions with EU states. British tourists will still be able to visit EU countries without a visa, as long as the trip lasts less than 90 days. British workers and students in other European countries may need work permits or visas.

Takeaway

The European Union is like a members-only club for European countries…

Members of elite clubs gain access to a wealth of perks and business opportunities, but they must pay a membership fee and follow all the rules. Similarly, joining the EU grants nations access to benefits like funding opportunities and the ability to trade without tariffs. Like a members-only club, there are criteria for membership, annual fees and rules to be followed.

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What is the European Union?

The European Union (EU) is an economic and political union of 27 European countries. It aims to allow all EU citizens to live, work, shop, study, and retire in the EU country of their choice. To achieve this, it preserves the free movement of people, services, goods, and capital. In addition to trade, commerce and migration, EU law covers everything from agriculture and energy, to health and transport.

Each member state contributes a share of national output to the EU budget, which helps fund the EU’s policy objectives. Examples of EU spending include job creation initiatives, study abroad programs, cultural development programs, scientific research, business support, and large infrastructure projects.

Which countries are EU members?

As of March 2020, the 27 European Union member states are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.

Today, the EU covers a large chunk of Europe. But the project began in the 1950s with just six founding members: Belgium, France, Germany, Italy, Luxembourg and the Netherlands. More nations started joining in the 1970s, and the union gradually expanded until Jan. 31, 2020, when the United Kingdom exited the bloc.

What is the purpose of the EU?

The European Union aims to promote peace, stability, and prosperity in Europe.

At the heart of the EU project lies the single market, which ensures that goods, services, capital, and people can move freely within EU territories. The removal of legal barriers and tariffs helps people trade and conduct business more efficiently. This has helped the EU become the world’s second-largest economy.

In addition to economic integration, the EU works to foster social cohesion among members. It aims to create a collective European identity with shared values such as human dignity, freedom, democracy, equality, human rights, and the rule of law. In 2012, the EU received the Nobel Peace Prize for its contributions to European society.

Other key EU goals include advancing scientific discoveries, preventing wild swings in prices (inflation control), achieving full employment across the bloc, safeguarding the natural environment, preserving individual European cultures and languages, and pushing for the wide use of the euro within the EU.

How is the EU governed?

The European Union consists of a number of different institutions.

The European Council, which is made up of the heads of state of EU countries, meets at least twice every six months to set the EU’s broad political agenda. It represents the highest level of cooperation between the members of the EU, but it can’t pass laws.

The European Commission, which consists of 27 commissioners (one from each EU country), proposes new EU laws, manages EU policies, allocates EU funding, enforces EU law, and represents the EU internationally.

The Council of the European Union may sound like the European Council, but it is a separate institution. Comprised of government ministers from each EU country, this body negotiates and adopts EU laws, coordinates EU member state policies, develops foreign policy, and approves the annual budget. There are no fixed members — Rather countries send ministers based on the policy area under discussion.

The European Parliament includes 705 directly elected MEPs (Members of the European Parliament). Together with the Council of the European Union, it passes EU laws based on proposals from the European Commission and establishes the EU budget. It also provides democratic supervision of all EU institutions, votes on international agreements, and elects the Commission President. EU voters directly elect MEPs every five years.

The Court of Justice of the European Union (CJEU) ensures that EU law is used consistently across all 27 member states. It typically settles legal disputes between EU institutions and European governments, but can also be called upon by organizations, firms, and citizens to take action against EU institutions. The CJEU is made up of two courts: the Court of Justice and the General Court. The Court of Justice includes one judge from each EU member state, plus 11 advocates general. It mainly focuses on interpreting EU law. The General Court comprises two judges from each EU nation and typically deals with cases related to trade, competition law, state aid, trademarks, and agriculture.

What is the currency of the EU?

The European Union requires that all member states commit in principle to adopting the euro, which launched in 2002, as their national currency. With around 341 million people using it every day, the euro is the second most-used currency in the world, after the US dollar. However, each EU nation must first meet a number of economic criteria before it can start using the euro, and some countries have opted out.

As of March 2020, 19 out of the 27 EU member states have adopted the euro and together are known as the Eurozone. These are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Although members have to commit to using the single currency in principle, nothing actually forces countries to adopt the euro. Today, eight EU countries do not use the currency: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden. Romania aims to start using the euro by 2024, and adopting the euro is one of the Polish government’s top priorities, although no date has been set. None of the other nations have target dates. Denmark has officially opted out of adopting the euro.

While it was an EU member, the United Kingdom continued to use the British pound rather than the euro as its currency.

How does a country join the EU?

A nation must submit a membership application to the European Commission to join the European Union. The European Commission then decides whether the country meets conditions for membership. Known as the “Copenhagen criteria,” these include having a free-market economy and a stable democracy, committing to adopt the euro, and maintaining the rule of law.

If the new country gains approval for membership, negotiations begin as the state adopts a long list of EU rules and regulations into national law.

As of March 2020, there are five countries approved as candidates for membership: Albania, North Macedonia, Montenegro, Serbia, and Turkey. These nations are in the process of blending EU regulations into domestic laws. The process can take a long time — Turkey became a candidate country in 1999 and has been taking part in negotiations since 2005.

Bosnia and Herzegovina and Kosovo have been selected as potential candidates, meaning they may be able to join the EU when they meet the Copenhagen criteria. The former submitted its application in 2016.

Which European countries are not in the EU?

As of March 2020, 16 European countries are not part of the European Union and have not been recognized by the EU as official candidates to join: Andorra, Armenia, Azerbaijan, Belarus, Georgia, Iceland, Liechtenstein, Moldova, Monaco, Norway, Russia, San Marino, Switzerland, Ukraine, United Kingdom, and Vatican City.

Some of these nations, such as Belarus and Russia, do not intend to join due to political differences. Others, such as Iceland, Liechtenstein, Norway, and Switzerland, have agreements in place to access various degrees of the single market. The microstates of Andorra, Monaco, San Marino, and Vatican City have monetary agreements in place to use the euro, but their small size makes them inappropriate for full EU membership.

What is the difference between the Eurozone and the EU?

The European Union refers to all 27 member states, while the Eurozone, officially called the euro area, describes the 19 EU states that have adopted the euro as their currency. The eight EU countries that do not use the euro have their own currencies and their own central banks to set monetary policy. In the Eurozone, the European Central Bank based in Frankfurt, Germany, sets monetary policy.

What is the history of the EU?

The predecessor to the European Union emerged in the aftermath of World War II. It initially took the form of the European Coal and Steel Community in 1950, before becoming the European Economic Community in 1957. The six founding members were Belgium, France, Germany, Italy, Luxembourg, and the Netherlands.

The six founding countries eliminated customs duties in 1968. By 1973, Denmark, Ireland, and the United Kingdom joined the EEC. During the 1970s, regional policy focused on creating jobs and infrastructure in poorer regions and fighting pollution. Starting in 1979, citizens could directly elect Members of the European Parliament. In 1981, Greece became a member, followed by Spain and Portugal in 1986.

The creation of the single market in 1986 encouraged free trade across EEC borders, a trend that accelerated after the fall of the Berlin Wall in 1989.

In 1993, the Maastricht Treaty formally established the European Union and unlocked the four freedoms that have come to define the EU: the movement of goods, services, people, and money. In 1995, Austria, Finland, and Sweden joined the EU.

The euro launched in 1999, and another 10 countries joined the EU in 2004, followed by Bulgaria and Romania in 2007. The financial crisis of 2008 damaged Europe economies, leaving Greece on the brink of exiting the bloc. In 2020, following a national referendum, the United Kingdom became the first member state to leave the EU.

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