What is european union

European Union (EU)

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What Is the European Union (EU)?

The European Union (EU) is a political and economic alliance of 27 countries. The EU promotes democratic values in its member nations and is one of the world’s most powerful trade blocs. Nineteen of the countries share the euro as their official currency.

The EU grew out of a desire to strengthen economic and political cooperation throughout the continent of Europe in the wake of World War II.

Key Takeaways

History of the European Union (EU)

The EU traces its roots to the European Coal and Steel Community, which was founded in 1950 and had just six members: Belgium, France, Germany, Italy, Luxembourg, and the Netherlands. It became the European Economic Community in 1957 under the Treaty of Rome and subsequently was renamed the European Community (EC).

This served to deepen the integration of the member nations’ foreign, security, and internal affairs policies. The EU established a common market the same year to promote the free movement of goods, services, people, and capital across its internal borders.

The EC initially focused on a common agricultural policy and the elimination of customs barriers. Denmark, Ireland, and the U.K. joined in 1973 in the first wave of expansion. Direct elections to the European Parliament began in 1979.

Creation of a Common Market

In 1986, the Single European Act embarked on a six-year plan to create a common European market by harmonizing national regulations.

The Maastricht Treaty took effect in 1993, replacing the EC with the European Union (EU). The euro debuted as a common single currency for participating EU members on Jan. 1, 1999. Denmark and the U.K. negotiated «opt-out» provisions that permitted countries to retain their own currencies if they chose.

Several newer members of the EU have also either not yet met the criteria for adopting the euro or chosen to opt out.

The European Debt Crisis

In the wake of the 2007-2008 global financial crisis, the EU and the European Central Bank struggled to deal with high sovereign debt and sluggish growth in Italy, Spain, Portugal, Ireland, and Greece.

Greece and Ireland received financial bailouts from the EU in 2010 conditioned on the implementation of fiscal austerity measures. Portugal followed in 2011. A second Greek bailout was needed in 2012.

The crisis abated after the European Union and the European Central Bank adopted a series of measures to support the sovereign and banking-sector debt of the affected countries.

Long-Term Measures

These included the establishment in October 2012 of the European Stability Mechanism (ESM), established to assist EU members experiencing severe financial problems, including an inability to access the bond markets. The ESM supplanted the temporary European Financial Stability Facility backstop in place since 2010.

The European Central Bank conducted a series of «targeted longer-term refinancing operations» in 2014, 2016, and 2019 to provide financing on favorable terms for EU financial institutions.

In 2015, the European Union loosened the provisions of the 2011 Stability and Growth Act requiring member states to target public debt of below 60% of gross domestic product and annual government budget deficits below 3% of GDP over the medium term.

The same year, a new EU agency, the Single Resolution Board, assumed responsibility for resolving bank failures in the euro area.

EU’s North-South Issues

While the relief measures addressed the crisis, they haven’t tackled one of its principal causes—the wide disparity in wealth and economic growth between the European Union’s heavily industrialized north and its poorer southern periphery, which remains less urbanized and more dependent on agriculture.

Because the industrialized north and the more rural south share a common currency, struggling southern economies can’t take advantage of currency depreciation to improve their international competitiveness. Without currency depreciation, southern exporters ultimately struggle to compete with their northern rivals, which benefit from faster productivity growth.

How It Works in the U.S.

In the U.S., federal transfer payments help to address similar economic disparities between regions and states.

States with higher average incomes tend to contribute a disproportionately large share of federal revenue, while those with lower incomes tend to account for a higher share of federal outlays.

In the European Union, the COVID-19 pandemic prompted joint spending measures some have called «an incomplete and fragile fiscal union in the making.»

The Brexit Bomb

After rejecting earlier calls for a popular referendum on the U.K.’s European Union membership, Conservative Prime Minister David Cameron promised a vote in 2013 and scheduled it in 2016. It was a time of growing popularity for the U.K. Independence Party, which opposed European Union membership.

After trailing in late polls, the Leave option won with nearly 52% of the vote on June 23, 2016. Cameron resigned the next day. The U.K. officially left the EU on Jan. 31, 2020.

In July 2020, a report by the Intelligence and Security Committee of the U.K. Parliament noted widespread media reports of Russian efforts on behalf of the Leave option and faulted the government for failing to investigate Russian involvement in British politics.

What Is the Purpose of the European Union?

The European Union was created to bind the nations of Europe closer together for the economic, social, and security welfare of all. It is one of several efforts after World War II to bind together the nations of Europe into a single entity.

How Is the European Union Changing in the 21st Century?

The original members of the European Union were the nations of Western Europe. In the 21st century, the EU has expand membership to the Eastern European nations that emerged after the collapse of the Soviet Union. Its current member nations include Bulgaria, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.

Why Was the European Union Created?

The overarching purpose of the European Union, in the years after World War II, was to put an end to the devastating wars that had wracked Europe for centuries. At the same time, it became increasingly clear that a united Europe would have far greater economic and political power than the individual nations in the post-war world.

What Is the European Union?

The History of the EU and How It Works

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The Balance / Jo Zixuan Zhou

The European Union is a unified trade and monetary body of 27 member countries. It eliminates all border controls between most EU members. The open border allows the free flow of goods and people. There may be police checks based on police information and experience, but these are not equivalent to border checks.

Any product manufactured in one EU country can be sold to any other member without tariffs or duties. Practitioners of most services, such as law, medicine, tourism, banking, and insurance, can operate a business in all member countries.

Key Takeaways

The Purpose of the EU

The EU’s purpose is to be more competitive in the global marketplace. It must balance the needs of its independent fiscal and political members at the same time.

Its 27 member countries 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.

How the EU Is Governed

Three bodies run the EU. The EU Council represents national governments. The Parliament is elected by the people. The European Commission is the EU staff. They make sure that all members act consistently in regional, agricultural, and social policies. The biggest source of funding for the EU budget is direct contributions by Member States, also known as Gross National Income (GNI)-based contributions.

Here’s how the three bodies uphold the laws governing the EU. These are spelled out in a series of treaties and supporting regulations:

Currency of the EU Area

The euro is the common currency for the EU area. It’s the second most commonly held currency in the world after the U.S. dollar. It replaced the Italian lira, the French franc, and the German Deutschmark, among others.

The value of the euro is a free-floating rather than a fixed exchange rate. Foreign exchange traders determine its value each day as a result. The most widely-watched value is how much the euro’s value is compared to the U.S. dollar. The dollar is the unofficial world currency.

The Difference Between the Eurozone and the EU

The eurozone consists of all countries that use the euro. All EU members pledge to convert to the euro, but only 19 have done so as of 2022. They are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The European Central Bank is the EU’s central bank. It sets monetary policy and manages bank lending rates and foreign exchange reserves. Its target inflation rate is less than 2%.

The Schengen Area

The Schengen Area guarantees free movement to those legally residing within its boundaries. Residents and visitors can cross borders without getting visas or showing their passports.

There are 26 members of the Schengen Area in total: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.

One EU country, Ireland, has declined the Schengen benefits. Four non-EU countries have adopted the Schengen Agreement. They are Iceland, Liechtenstein, Norway, and Switzerland. Three territories are special members of the EU and part of the Schengen Area: the Azores, Madeira, and the Canary Islands. Three countries have open borders with the Schengen Area: Monaco, San Marino, and Vatican City.

This chart shows which countries are members of the EU, the eurozone, and the Schengen Area:

The History of the EU

The concept of a European trade area was first established in 1950. The European Coal and Steel Community (ECSC) had six founding members: Belgium, France, Germany, Italy, Luxembourg, and the Netherlands.

The Treaty of Rome established a common market in 1957. It eliminated customs duties in 1968 and put in place standard policies, particularly in trade and agriculture. The ECSC added Denmark, Ireland, and the United Kingdom in 1973. It created its first Parliament in 1979. Greece joined in 1981, followed by Spain and Portugal in 1986.

The Treaty of Maastricht established the European Union common market in 1993. The EU added Austria, Sweden, and Finland two years later. Twelve more countries joined in 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. Bulgaria and Romania joined in 2007.

The Treaty of Lisbon increased the powers of the European Parliament in 2009. It gave the EU the legal authority to negotiate and sign international treaties. It increased EU powers, border control, immigration, judicial cooperation in civil and criminal matters, and police cooperation.

The Treaty of Lisbon abandoned the idea of a European Constitution. European law is still established by international treaties.

The EU Economy

The EU’s top three exports were petroleum, medication, and automobiles in 2019. Its top imports are petroleum, communications equipment, and natural gas. Its top export partner is the United States, and its top import partner is China.

Frequently Asked Questions (FAQs)

Which country has the largest economy in the European Union?

How many stars are on the European Union flag?

There are 12 stars on the EU flag. The stars represent unity, solidarity, and harmony. The number 12 symbolizes perfection. But the number 12 doesn’t directly reference the number of member nations or any other specific grouping of 12.

European Union

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Read a brief summary of this topic

European Union (EU), international organization comprising 27 European countries and governing common economic, social, and security policies. Originally confined to western Europe, the EU undertook a robust expansion into central and eastern Europe in the early 21st century. The EU’s members are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. The United Kingdom, which had been a founding member of the EU, left the organization in 2020.

The EU was created by the Maastricht Treaty, which entered into force on November 1, 1993. The treaty was designed to enhance European political and economic integration by creating a single currency (the euro), a unified foreign and security policy, and common citizenship rights and by advancing cooperation in the areas of immigration, asylum, and judicial affairs. The EU was awarded the Nobel Prize for Peace in 2012, in recognition of the organization’s efforts to promote peace and democracy in Europe.

Origins

The EU represents one in a series of efforts to integrate Europe since World War II. At the end of the war, several western European countries sought closer economic, social, and political ties to achieve economic growth and military security and to promote a lasting reconciliation between France and Germany. To this end, in 1951 the leaders of six countries—Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany—signed the Treaty of Paris, thereby, when it took effect in 1952, founding the European Coal and Steel Community (ECSC). (The United Kingdom had been invited to join the ECSC and in 1955 sent a representative to observe discussions about its ongoing development, but the Labour government of Clement Attlee declined membership, owing perhaps to a variety of factors, including the illness of key ministers, a desire to maintain economic independence, and a failure to grasp the community’s impending significance.) The ECSC created a free-trade area for several key economic and military resources: coal, coke, steel, scrap, and iron ore. To manage the ECSC, the treaty established several supranational institutions: a High Authority to administrate, a Council of Ministers to legislate, a Common Assembly to formulate policy, and a Court of Justice to interpret the treaty and to resolve related disputes. A series of further international treaties and treaty revisions based largely on this model led eventually to the creation of the EU.

Goals, Values, and Benefits of the European Union

The European Union (EU) is a collection of 27 countries, the majority of the European continent, committing themselves to social, political and economic progress and cooperation. In this article, we’ll look at what the EU is, its goals, values, and the benefits gained by member states and citizens.

What is European Union?

The European Union (EU) is a unique institution founded in the aftermath of World War II. It has since grown into one of the most powerful economies in the world. The European Union started with only six countries: Belgium, Germany, France, Italy, Luxembourg, and the Netherlands.

The organisation expanded from western Europe to central and eastern Europe at the beginning of the 21st century. Currently, nineteen (19) more countries have been added: Austria, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Ireland, Latvia, Lithuania, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. Treaties after treaties, the EU has now 27 member countries, mainly working together to maintain peace.

What began as a union focused solely on economic stability has since evolved to policy creation and implementation, touching upon the climate, environment and health, justice, security, migration, and eventually, the formation of the Schengen Area. In addition to its economic benefits, membership in the EU also provides citizens with freedoms such as free movement within member countries. Despite recent challenges, the EU remains an important force for peace and prosperity in Europe and worldwide.

With this overview of the European Union, let us understand its functions, goals, and values.

The Main Purpose of the European Union

What are the goals of the European Union?

The European Union has grown from an economy-only organisation to one with a more holistic mission. Article 3 of the Lisbon Treaty fully encapsulates the organisation’s goals.

The EU also aims to combat social exclusion and discrimination, respecting the rich cultural and linguistic diversity. Promoting scientific and technological progress in the organisation is also a priority, directly influencing the region’s sustainable development.

What are the values of the European Union?

All 27-member states hold inclusion, tolerance, justice, solidarity and non-discrimination as crucial pillars of the European Union.

What are the benefits of the European Union?

From peace and security to global power, the EU gives benefits to improving people’s daily lives. European citizens can travel and work freely throughout the European Union, strengthening their ties. European institutions offer a platform for European citizens to voice their opinions and debate policies that affect them.

Peace and Security

The EU was awarded the Nobel Peace Prize in 2012. It is the most successful peace project in human history. European citizens are aware of the EU’s role in bringing peace between European countries and between European countries and their neighbours.

Single Market

Citizens can live or work in any EU country, move their money, freely sell goods, and provide services on the same basis. All these are possible in the world’s most highly developed and open marketplace: the single market.

High food and environmental standards

The food and environment in the EU meet the world’s highest quality standards. Thanks to the member countries’ cooperation, companies or institutions are deterred from selling contaminated food or polluting any areas.

Business and Consumer benefits

Businesses are supported and trained. Consumers in the EU are assured that they can get refunds if they return products. This refund policy is applicable to delayed or cancelled flights. Goods in the EU are also required to meet the world’s best quality and safety standards.

Human Rights

The EU aims to protect all minorities and vulnerable groups. No one is left behind in the organisation regardless of nationality, language group, gender, profession, culture, sexuality, or disability. Citizens are also protected against unfair treatment in the workplace.

Global Power

With the 27 member countries working together, there is much more voice than 27 nations acting separately. The EU promotes cooperation and collaboration among European countries and provides a shared identity for its member states. Hence, European states also find it much easier to cooperate in an organisation like the European Union.

The European Union and the World

The European Union remains an institution that continues to grow in leaps and bounds. Policies affecting European states serve as a model for other countries and regions that want coordination in their economic, social and political systems.

The EU is the world’s largest trade block and the biggest exporter of manufactured goods and services. It is also the biggest import market for over 100 countries across the globe.

The organisation also plays a significant role when it comes to diplomacy. It promotes security and prosperity, stability, fundamental freedoms, and democracy internationally. As the leading donor of humanitarian aid, the organisation is committed to providing help to man-made and natural disaster victims.

History of the EU

The following visionary leaders inspired the creation of the European Union we live in today. Without their energy and motivation, we would not be living in the sphere of peace and stability that we take for granted.

From resistance fighters to lawyers and parliamentarians, the EU pioneers were a diverse group of people who held the same ideals: a peaceful, united and prosperous Europe.

Beyond the pioneers described below, many others have worked tirelessly towards and inspired the European project. This section on the EU’s pioneers is therefore a work in progress.

Timeline

Find out about the creation of the European Union and how it has developed over the decades.

How post-war cooperation in Europe led to the creation of the European Coal and Steel Community, the signing of the Treaties of Rome and the birth of the European Parliament.

How the European Union developed through the 1960s, with further economic integration in Europe and the beginnings of international cooperation.

How the European Union developed in the 70s, with the first addition of new members, European elections and a regional policy to boost poorer areas.

How the European Union developed in the 1980s with more countries joining, the Erasmus programme and the start of the single market.

How the European Union developed in the 1990s, with more expansion, and the launch of the single market, border-free travel and the euro.

How the European Union developed from 2000 to 2009 with 12 new countries joining, the euro becoming legal tender and the signing of the Lisbon Treaty.

How the European Union developed from 2010 to 2019, responding to the financial crisis, Croatia joining the EU, and the UK voting to leave.

How the European Union has developed since 2020, responding to the COVID-19 pandemic while putting Europe on the road to economic recovery and fighting climate change.