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European Union (Part 2) Finansist | The fi nancial world European Union (part 2) uropean Communities: European Atomic Energy Community (also known Community plus Euratom. The term as Euratom) — each founded pursuant to EEuropean Communities refers col- a separate treaty in the 1950s. A third en- lectively to two entities — the European tity, the European Coal and Steel Commu- Economic Community (now called the nity, was also part of the European Com- European Community) and the European munities, but ceased to exist in 2002 upon 36 FEVRAL 2014 The fi nancial world | Finansist the expiration of its founding treaty. Since are increasingly administered by the Com- 1967, the European Communities have munity (as they are built up from mere con- shared common institutions, specifical- cepts to actual practice). Effect of Constitu- ly the Council, the European Parliament, tional Treaty. If it is ratified, the proposed the Commission and the Court of Justice. new Treaty establishing a Constitution for In 1992, the European Economic Commu- Europe would abolish the three-pillar struc- nity, which of the three original communi- ture and, with it, the distinction between ties had the broadest scope, was renamed the European Union and the European the "European Community" by the Treaty Community, bringing all the Community's of Maastricht. European Union: European activities under the auspices of the Euro- Communities plus CFSP and PJCC. The pean Union and transferring the Commu- European Communities are one of the three nity's legal personality to the Union. There pillars of the European Union, being both is, however, one qualification: it appears the most important pillar and the only one that Euratom would remain a distinct enti- to operate primarily through supranational ty governed by a separate treaty (due to the institutions. The other two "pillars" – Com- strong controversy the issue of nuclear ener- mon Foreign and Security Policy, and Police gy causes, and Euratom's relative unimpor- and Judicial Co-operation in Criminal Mat- tance, it was considered expedient to leave ters – are looser intergovernmental group- Euratom alone in the process of EU con- ings. Confusingly, these latter two concepts stitutional reform). A basic tension exists FEVRAL 2014 37 Finansist | The fi nancial world other actors. Furthermore, decisions are made by majority votes, hence it is possible for a member state to be forced by the oth- er member states to implement a decision against its will. Some forces in European Union politics favour the intergovernmental approach, while others favour the suprana- tional path. Supporters of supranationalism argue that it allows integration to proceed at a faster pace than would otherwise be possi- ble. Where decisions must be made by gov- ernments acting unanimously, decisions can take years to make, if they are ever made. Supporters of intergovernmentalism argue that supra-nationalism is a threat to nation- al sovereignty, and to democracy, claiming that only national governments can pos- sess the necessary democratic legitimacy. Intergovernmentalism is being favoured by more eurosceptic nations such as the Unit- ed Kingdom, Denmark and Sweden; while more integrationist nations such as the Ben- within the European Union between inter- elux countries, France, Germany, and Italy governmentalism and supranationalism. In- have tended to prefer the supranational ap- tergovernmentalism is a method of decision proach. The European Union attempts to making in international organizations where strike a balance between the two approach- power is possessed by the member states es. This balance however is complex, result- and decisions are made by unanimity. Inde- ing in the often labyrinthine complexity of pendent appointees of the governments or its decision-making procedures. Starting in elected representatives have solely advisory March 2002, a Convention on the Future of or implementation functions. Intergovern- Europe again looked at this balance, among mentalism is used by most international or- other things, and proposed changes. These ganizations today. An alternative method of changes were discussed at an Intergovern- decision making in international organiza- mental Conference (IGC) in May 2004 and tions is supranationalism. In supranational- led to the Constitutional Treaty discussed ism power is held by independent appoint- above. Supranationalism is closely related ed officials or by representatives elected by to the intergovernmentalism vs. neofunc- the legislatures or people of the member tionalism debate. This is a debate concern- states. Member state governments still have ing why the process of integration has taken power, but they must share this power with place at all. Intergovernmentalists argue that 38 FEVRAL 2014 The fi nancial world | Finansist the process of EU integration is a result of act legislation in order to bring them into tough bargaining between states. Neofunc- line with the common European Union le- tionalists, on the other hand, argue that the gal framework, known as the Acquis Com- supranational institutions themselves have munautaire. (See also European Free Trade been a driving force behind integration. As Association (EFTA), European Economic the changing name of the European Union Area (EEA) and Single European Sky.) See (from European Economic Community to table of states participating in some of the European Community to European Union) initiatives. Many of the policies of the EU suggests, it has evolved over time from a pri- relate to the development and maintenance marily economic union to an increasingly of an effective single market. Significant ef- political one. This trend is highlighted by forts have been made to create harmonized the increasing number of policy areas that standards designed to bring economic ben- fall within EU competence: political power efits through creating larger, more efficient has tended to shift upwards from the mem- markets. The power of the single market ber states to the EU. Some member states reaches beyond the EU borders, because have a domestic tradition of strong regional to sell within the EU, it is beneficial to con- government. This has led to an increased fo- form to its standards. Once a non-member cus on regional policy and the European re- country's factories, farmers and merchants gions. A Committee of the Regions was es- conform to EU standards, much of the cost tablished as part of the Treaty of Maastricht. of joining the union has already been sunk. EU policy areas cover a number of differ- At that point, harmonizing domestic laws ent forms of co-operation.Autonomous de- in order to become a full member is rela- cision making: member states have granted tively painless, and may create more wealth the European Commission power to issue through eliminating the customs costs. Euro decisions in certain areas such as competi- banknotes. Free trade of goods and servic- tion law, state aid control and liberalisation. es among member states (an aim further Harmonisation: member state laws are har- extended to three of the four EFTA states monised through the EU legislative pro- by the European Economic Area, EEA). A cess, which involves the European Commis- common EU competition law controlling sion, European Parliament and Council of anti-competitive activities of companies the European Union. As a result of this Eu- (through antitrust law and merger control) ropean Union law is increasingly present in and member states (through the State Aids the systems of the member states. Co-oper- regime). ation: member states, meeting as the Coun- The Schengen treaty allowed removal of cil of the European Union, agree to co-oper- internal border controls and harmoniza- ate and co-ordinate their domestic policies. tion of external controls between its mem- The tension between EU and national (or ber states. This excludes the UK and Ire- sub-national) competence is an enduring land, which have derogations, but includes one in the development of the European the non-EU members Iceland and Norway. Union. All prospective members must en- Switzerland also voted in 2005 to become FEVRAL 2014 39 Finansist | The fi nancial world part of the Schengen zone. Freedom for cit- The establishment of a single market avia- izens of its member states to live and work tion area. The establishment of a Europe- anywhere within the EU with their spous- an Defence Agency. Freedom for citizens es and children, provided they can support of the EU to vote in local government and themselves (also extended to the other EEA European Parliament elections in any mem- states and Switzerland). This has led to a ber state. Co-operation in criminal matters, gross anomaly whereby family related social including sharing of intelligence (through welfare benefits are payable by the member EUROPOL and the Schengen Information state where an EU citizen is employed, even System), agreement on common definition where the family of the worker are resident of criminal offences and expedited extradi- elsewhere in the Union. tion procedures. A common foreign policy Free movement of capital between mem- as a future objective, however this has some ber states (and other EEA states). Harmo- way to go before being realized. The divi- nization of government regulations, cor- sions between the member states (in the porations law and trademark registrations. letter of eight) and then-future members Eurozone, a single currency area with the (in the Vilnius letter) during the run up euro (excluding the UK and Denmark, to the 2003 invasion of Iraq highlights just which have derogations). Sweden, although how far off this objective could be before it not having a specific opt-out clause, has becomes a reality. A common security pol- not joined the ERM II, voluntarily exclud- icy as an objective, including the creation ing itself from the monetary union. A large of a 60,000-member European Rapid Re- amount of environmental policy co-ordi- action Force for peacekeeping purposes, an nation throughout the Union. A Common EU military staff and an EU satellite center Agricultural Policy and a Common Fish- (for intelligence purposes).
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