eu lecturee

7/28/2019 EU Lecturee

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International Management

Dr. Thomas Prosser


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Thinking about popular

representations of the EU...


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Thinking about popular

representations of the EU...


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Lecture structure I Historical development of the EU

II EU institutions and their functions

III Key achievements of the EU and its effects on firms IV Common criticisms of the EU

V Economic crisis and the future


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Historical precedents for European

integration The Roman Empire

The Holy Roman Empire

The Catholic church and notion of Christendom European imperial ambitions of Louis XIV and

Napoleon


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Immediate pressures for closer

European integration Germany had invaded and occupied France three

times in seventyfive years by 1945

Experience of two world wars and the Holocaust A European Germany, not a German Europe

Thomas Mann

Crucial to remember that the primary motivation for

the creation of the European Communities was thedesire to avoid further European wars


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The European Communities 1951 Treaty of Paris establishes the European Coal and

Steel Community and includes France, Germany, Italy,Belgium, Netherlands and Luxembourg

European Economic Community and EuropeanAtomic Energy Community established by the samecountries in 1957

Three communities gain a common set of institutionsunder the 1965 merger treaty


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The European Communities 1985 Schengen Treaty

1986 Single European Act

1992 Maastricht Treaty creates European Union 1997 Amsterdam Treaty

1999 Introduction of Euro

2001 Nice Treaty

2004Enlargement of EU to 25 member states

2007 Lisbon Treaty


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The European Union: the key

actors The European Commission

The Council of the European Union

The European Parliament The European Court of Justice (ECJ)

The European Central Bank (ECB)

The European social partners (ETUC, BusinessEurope, UEAPME, CEEP)


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The European Union: the key

actors


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Enlargements of the EU 1973: Denmark, Ireland and the UK

1981: Greece

1986: Portugal and Spain 1995: Austria, Finland and Sweden

2004: Malta, Cyprus, Hungary, Poland, Latvia,Lithuania, Estonia, Czech Republic, Slovenia, Slovakia

2007: Bulgaria, Romania


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So, whats driving the process of

European integration? The need to guarantee European peace

Economic drivers: free trade, a single currency and a

single market all benefit economic growth The development of an European cultural identity:

because (some!) European citizens begin to feel moreEuropean, there has been a gradual shift in loyalty to

the idea of the EU. Freedom of movement has helpedwith this.


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So, whats driving the process of

European integration? The EU institutions themselves: institutions like the

European Commission have gradually sought toincrease their power since their creation.

The EU is a common response to globalization:individual member states are less viable in aglobalized, competitive world

General process of spill-over: because EU institutionshave acquired more and more power, firms andnational elites increasingly look to them to lobby.


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EU achievements: economic

integration Customs Union completed by 1968 no tariffs

between members, common external tariff

1979 Cassis de Dijon case permitted EU to enforcesingle market

1985 Single Market White Paper (almost 300 barriersto go by 1992)

Fiscal barriers, physical barriers, technical barriers 1987 Single European Act

Creation of single market by 1992


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EU achievements: economic

integration European economic integration has had several

benefits for member states

Greater specialization between member states Countries tend to become more efficient as they

compete with other member states

Introduction of reforms that have made member state

economies more efficient


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Benefits of European economic

integration for firms Firms able to achieve greater economies of scales

Access to hundreds of millions of consumers

Firms tend to become more efficient as they competewith firms in other member states

Creation of Euro-company


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EU achievements: the Euro Euro was established by the provisions of the 1992

Maastricht Treaty

In order to join the Euro, member states had to complywith a series of fiscal and monetary criteria

The Euro was introduced in January 1999

The first coins and banknotes came into circulation in

January 2002


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Benefits of the Euro Trade becomes easier between countries because there

is no longer fluctuation in exchange rates

Helps complete the single market Loss of national ability to determine monetary

policy/constrains on fiscal policy means that memberstates are likely to become more competitive

Helps create a common European identity and makestravel between member states easier


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Benefits of the Euro for firms Reduction in exchange rate costs

Reduction in uncertainty associated with f luctuatingexchange rates

Helps entry into new European markets

Increases the ability of firms to compare costs acrossEuropean sites and to make their operations more

efficient


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EU achievements: Freedom of

movement The EU has always promoted the rights of citizens in

member states to freely travel to and work and residein other member states

These rights have been guaranteed by a series ofDirectives

1985 Schengen Agreement abolished borders between

countries signatory to it Twenty-six European countries are in the Schengen

Zone and it covers over 400 million people


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Benefits of freedom of movement

for firms Greatly increased pool of skilled workers

Often decreases wage costs though competition inlabour markets

Immigration often helps decrease tax burdens on firms

For these reasons firms tend to view immigrationpositively it is public opinion that tends to be hostile

to mass immigration


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EU Social Policy There also exists a body of EU law and policy that

exists to strengthen social rights in member states

European structural funds (European RegionalDevelopment Fund, European Social Fund)

Advanced body of equal opportunities legislation

Employment protection legislation that concerns the

rights of workers to be informed and consulted,working time regulation, and protection of the rightsof atypical workers

Advanced body of health and safety legislation


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What are the advantages of

European social policy? If there is a common market, then there has to be a

common social policy

Prevents social dumping: the lowering of socialstandards due to immigration and offshoring

Idea of common EU social citizenship that is foundedon a strong European social model


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Implications of European social

policy for firms Often entails a greater regulatory burden many firms

(particularly in the UK) thus oppose much Europeansocial policy

However it helps firms to coordinate HR policiesacross European countries

Can also be advantageous for firms based in member

states where there are high existing levels of socialpolicy regulation


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Thinking critically about the EU: a

democratic deficit? One of the key criticisms that is made against the EU

is that it is undemocratic

The argument is that power is concentrated in thehands of unelected bureaucrats, and that they havegradually wrested power from nationally electedparliaments

This objection has much to it; political scientists havedescribed the EU as less democratic than thetraditional nation state


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Thinking critically about the EU: does

the EU smother us with red tape? One of the key allegations that is made on the political

right, and particularly in the UK, is that legislation thatemanates from the EU places very high burdens on firms

It should be noted however that in countries like Francethe EU is often criticized for its pro-business agenda; thereaction to EU regulation often depends on pre-existingnational regulatory traditions

Furthermore, the volume of EU regulation has declined inmany areas in recent years, and soft law (non-legallybinding guidelines) are increasingly popular at the EU-level


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Thinking critically about the EU: has it

unleashed uncontrolled immigration?A further critique of the EU (on the political right and

left in many Western European countries) is that it hasunleashed uncontrolled mass migration

This argument has been made with more and moreforce since the accession of ten new member statessince 2004

Most old member states (with the exception of UK,

Ireland and Sweden) imposed restrictions on the entryof immigrants from the new member states

But, isnt the EU all about freedom of movement?

Particular worries about the future accession of Turkey


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Disadvantages of the EU for firms Increased competition has led to many firms

becoming bankrupted

Break up of national monopolies

Increased regulation


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Crises in the 2000s EU split over the invasion of Iraq in 2003

French and Dutch voters reject the proposed EUconstitution in referendums in 2005

The sub-prime crisis affects global economies from thesummer of 2007

In 2008, real economies begin to be affected and

outputs fall and unemployment rates rise


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EU sovereign debt crisis Partly as a result of the economic crisis, several

Eurozone countries were severely indebted by 2008

The yields on Government bonds from many Eurozone

countries (the rate at which these countries borrowmoney from financial markets) went up after a seriesof strikes by financial markets

As a result, three Eurozone countries (Greece, Ireland

and Portugal) needed emergency loans in 2010-11 There was a big political backlash against these

countries and the EU in general in many NorthernEuropean member states


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EU sovereign debt crisis


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EU sovereign debt crisis


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The future

Will the EU be able to weather the current crisis?

If so, will an Eurozone emerge with greater economicand fiscal powers?

How will the EU be able to respond to concerns aboutits legitimacy?

What about future enlargements? Will Turkey and

Ukraine enter the EU in future years?


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Questions?

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