European Union: History, Structure, and Expansion

Introduction: The EU as a Modern Economic Power

The European Union today is one of the most powerful economic entities in the world. Its common currency, the euro, rivals the once-dominant U.S. dollar as the most desirable payment option for international business. Nations fight to become part of the EU's framework, vying to demonstrate a commitment to free trade, economic liberalization, and human rights standards — as Turkey did in 2005, during the European Parliament's debate about its admission to the union (Rice-Oxley 2005). Not so long ago, however, the EU's transformation into its modern incarnation seemed tenuous, as various members debated the value of a union with no restrictions between nations regarding travel and labor exchanges, no prohibitive tariffs, and a homogenous standard for goods, fossil fuel emissions, and other economic areas once wholly regulated by national governments.

Although certain aspects of the EU's existence and expansion remain controversial, the EU today stands as a miracle of modern history. The war-ravaged nations of postwar Europe — old enemies as well as former allies — merged together to engage in discourse through a common parliament and council, and to share the same currency, economic standards, and interests.

Historical Roots and Founding Treaties

The concept of an economically united Europe and a commonly shared currency is actually quite long-standing, dating back to the Second World War. It was hoped that economic unity would guard against the dangers of future conflicts. As the EU itself has noted: "The historical roots of the European Union lie in the Second World War. The idea was born because Europeans were determined to prevent such killing and destruction ever happening again. In the early years, the cooperation was between six countries and mainly about trade and the economy. Now the EU embraces 27 countries and 490 million people" ("United in diversity," 2008, EUROPA).

As early as 1950, the European Coal and Steel Community united Belgium, France, Germany, Italy, Luxembourg, and the Netherlands. In 1957, the Treaty of Rome created the European Economic Community (EEC), or "Common Market." In the 1960s, the Common Market countries agreed to end customs duties between one another and to establish common standards and controls over food production ("The history of the European Union," 2008, EUROPA). The current structure of the EU formally came into being after a historic agreement in 1987 called the Single European Act, the treaty which provided the basis for today's Single Market. The Maastricht Treaty of European Union was signed in 1993, and the Treaty of Amsterdam followed in 1999, finalizing the process ("The history of the European Union," 2008, EUROPA).

Agricultural Subsidies and Regional Policy Controversies

Despite this history of early cooperation, regulations over regional policies remain controversial even today. For example, in 2005, the London-based Times argued that French farmers were holding Europe hostage, given that "three times as many French farmers receive large subsidies from the EU than those of any other country. In total, France receives almost twice as much in direct subsidies for its farmers as any other member state, and they are mostly channeled to large farmers rather than traditional small-scale land holders.... Despite the huge discrepancies, France steadfastly refuses to countenance any reduction in farm subsidies" from the EU (Browne & Smith 2005).

Economic Benefits of the Single Market and the Euro

It is hoped that increased cooperation facilitated by the EU will lead to better, universal environmental protections, as well as greater European dialogue about security and defense matters. The EU also encourages travel and thus cultural exchange. Today, EU citizens can travel without having their passports checked at the borders. "Millions of young people study in other countries with EU support" ("The history of the European Union," 2008, EUROPA).

Ease of travel is further facilitated by the fact that thirteen member nations use the euro. The advantage of the euro for consumers is that they can not only shop in another EU country where goods are cheaper, but also compare prices within the Eurozone nations of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Spain. "As a result, manufacturers and retailers have taken steps to cut unjustifiably high prices. Travel for shopping, leisure or business from one euro country to another is cheaper because no money needs to be changed and no commission paid" ("Panorama of the European Union," 2008, EUROPA).

There is also a greater sharing of individuals through the ability of EU nationals to work without restrictions in other EU nations and to study throughout the EU. The elimination of government regulations propping up inefficient industries has meant that "competition introduced by the EU's frontier-free single market has driven quality up and prices down. Phone calls, internet access, and air travel have all become cheaper. Households can increasingly choose the best bargain among a range of suppliers of electricity and gas" ("Panorama of the European Union," 2008, EUROPA).

Although the European Central Bank originally required member nations to adopt the euro, the United Kingdom, Denmark, and Sweden refused, and still use their own currencies, as do Switzerland and Liechtenstein. The pound and franc thus remain legal tender in those countries.