European Union (EU)

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

19 of these countries use the 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.

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
  • 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.  

o Multiple rounds of interest rate cuts and economic stimulus failed to resolve the problem. 

o 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 the U.K. government, and the nation voted to leave the EU. Now the process is under the UK Parliament for formal withdrawal from the EU.

 

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. 

Objectives of EU 

The EU aims at the closer economic and political integration of the member countries in the following ways: 

  • Establishing an economic and a monetary union 
  • Implementing a common foreign and defence policy
  • Strengthening of its economic and political institutions and 
  • Developing relations in the spheres of home affairs and justice. 

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. The 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: 

o 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

o 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: 

o The EU is committed to helping victims of man-made and natural disasters worldwide and supports over 120 million people each year. 

o EU and its constituent countries are the world's leading donor of humanitarian aid. 

  • Diplomacy and security:

o 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.

European Single Market 

  • It is the Common Market Structure of the European Union. 
  • Seeks to guarantee the free movement of goods, capital, services, and labour – the ‘four freedoms’– within the European Union 
  • The market encompasses the EU's 27 member states and has been extended, ∙ with exceptions, to Iceland, Liechtenstein and  
  • Norway through the Agreement on the European Economic Area, to Switzerland through bilateral treaties, and to the United Kingdom through the duration of its transition period as specified in the Brexit withdrawal agreement. 
  • The market is intended to be conducive to increased competition, increased specialisation, larger economies of scale, allowing goods and factors of production to move to the area where they are most valued, thus improving the efficiency of the allocation of resources.  
  • It is also intended to drive economic integration whereby the once separate economies of the member states become integrated within a single EU-wide economy.  
  • Half the trade in goods within the EU is covered by legislation harmonised by the EU. 
  • The creation of the internal market as a seamless, single market is an ongoing process, with the integration of the service industry still containing gaps. 
  • It also has an increasing international element, with the market represented as one in international trade negotiations.

Lisbon Treaty 

The Lisbon Treaty, also known as the Treaty of Lisbon, updated regulations for the European Union, establishing a more centralized leadership and foreign policy, a proper process for countries that wish to leave the Union, and a streamlined process for enacting new policies. 

The treaty was signed on December 13, 2007, in Lisbon, Portugal, and amended the two previous treaties that established the foundation for the European Union. 

Before the Lisbon Treaty  

The Lisbon Treaty was signed by the 27 member states of the European Union and officially took effect in December of 2009, two years after it was signed. It amended two existing treaties, the Treaty of Rome and the Maastricht Treaty. 

  • Treaty of Rome: Signed in 1957, this treaty introduced the European Economic Community (EEC), reduced customs regulations between member countries, and facilitated a single market for goods and the set of policies for transporting them. Also known as the Treaty on the Functioning of the European Union (TFEU). 
  • Maastricht Treaty: Signed in 1992, this treaty established the three pillars of the  European Union and paved the way for the euro, the common currency. Also known as the Treaty on European Union (TEU). 

While these previous treaties set ground rules and tenets of the European Union, the Lisbon  Treaty went further to establish new Union-wide roles and official legal procedures. 

What the Lisbon Treaty Changed  

The Lisbon Treaty was built on existing treaties but adopted new rules to enhance cohesion and streamline action within the European Union. Important articles of the Lisbon Treaty include: 

  • Article 18: Established protocol for electing a High Representative of the Union for Foreign Affairs and Security Policy. Elected in or out of office by a majority vote, this  Representative oversees the Union's foreign and security affairs. 
  • Article 21: Detailed global diplomatic policy for the European Union, based on the principles of universal human rights, democracy, and development. The Union pledged to forge alliances with those countries that support these beliefs and reach out to third world nations to help them develop. 
  • Article 50: Established procedures for a member country to leave the European Union. 

The Lisbon Treaty also replaced the previously rejected Constitutional Treaty, which attempted to establish a Union constitution. Member countries couldn't agree on the voting procedures established in the constitution, since some countries, such as Spain and Poland, would lose voting power. 

The Lisbon Treaty resolved this issue by proposing weighted votes and extending the reach of qualified majority voting. 

Opinions of the Lisbon Treaty  

Those who supported the Lisbon Treaty argued that it enhanced accountability by providing a better system of checks and balances and that it gave more power to the European Parliament, which held major influence in the Union's legislative branch. 


Many critics of the Lisbon Treaty argued that it pulled influence toward the centre, forming an unequal distribution of power that ignored the needs of smaller countries. 

ARTICLE 50 

Article 50 is a clause in the European Union's (EU) Lisbon Treaty that outlines the steps to be taken by a country seeking to leave the bloc voluntarily. Invoking Article 50 kick-starts the formal exit process and allows countries to officially declare their intention to leave the EU. The United Kingdom was the first country to invoke Article 50 after a majority of British voters elected to leave the union in 2016. 

How Article 50 Works:
  • Article 50 is part of the Lisbon Treaty, which was signed and ratified by all 27 member states of the European Union in 2007 and came into effect in 2009.  
  • The article outlines how a member nation may leave the EU voluntarily. 
  • As noted above, the article states: “Any member state may decide to withdraw from the  union in accordance with its own constitutional requirements.” 

According to the article's text: 

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements. 

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member  State concerned, unanimously decides to extend this period. 

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the  Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it. A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union. 

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49. 

Special Considerations  

Article 50 became a subject of serious discussion during the European sovereign debt crisis of  2010 to 2014 when Greece's economy appeared to be spiralling out of control. In an attempt to save the euro and perhaps the EU from collapsing, leaders considered expelling Greece from the eurozone.

 

The problem they encountered with Article 50 was that there was no clear guidance for pushing a member state out against its will. Nor was it necessary to remove Greece from the EU—just from the eurozone. Greece was eventually able to reach agreements with its EU creditors. 

Example of Article 50:-

BREXIT 

The United Kingdom left the EU on Jan. 31, 2020, and was the first country to invoke Article 50 to do so. It came after a majority of British citizens voted to leave the union and pursue Brexit in a referendum on June 23, 2016, leading British Prime Minister Theresa May to invoke the article on March 29, 2017. 


Brexit is an abbreviation for "British exit," referring to the U.K.'s decision in a June 23, 2016  referendum to leave the European Union (EU).


The process was mired by deadlines and extensions, negotiations, and stumbling blocks put forth by both British and EU leaders. May's attempts for an agreement were rejected by parliament. Negotiations were renewed by Boris Johnson, who became prime minister after  May resigned. 

Key Points 

  • The UK faced a lot of challenges in materializing this move finally. 
  • It is a notable change for the UK although nothing will change immediately because of the 11-month transition period negotiated as part of an EU-UK exit deal, 2019. 
  • The UK will be able to work in and trade freely with EU nations and vice versa until  December 31, 2020. However, it will no longer be represented in the EU's institutions. 
  • From 2021, the UK and EU will enter a new relationship possibly underpinned by a free trade deal. 

EU-UK Exit Deal 

  • This agreement sets out the exact terms of the UK and EU relationship immediately after exit but it is not clear on what terms the UK and EU’s future relationship will be. 
  • A key part of the withdrawal agreement was, there would be a transition period, until the end of 2020. 
  • The transitional arrangement is designed to make the separation process smoother and it covers subjects like trade, law, and immigration. 

o It will give them more time to iron out all the details of their future relationship including a possible free trade deal. 

  • During the transition, the UK will be officially out of the EU and not be represented on  EU bodies but would still have the same obligations as an EU member. That includes remaining in the EU customs union and the single market, contributing to the EU’s budget and following EU law. 
  • The only way for the UK to become an EU member nation again would be to reapply. 

Conclusion 

Evolution of the 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 rising living standards of people in weaker members of a group.

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Blog Post written by:
Anurag Trivedi
UPSC Mentor