Economics of the European Union

Economics of the European Union : Economics of the European Union Prepared for Understanding and Teaching the European Union A Summer Workshop for Secondary School Educators June 15, 2007

Stages of Economic Integration : Stages of Economic Integration - Free Trade Area Country 1 Country 2 Country 3

Stages of Economic Integration : Stages of Economic Integration - Customs Union Country 1 Country 2 Country 3 Country 4

Stages of Economic Integration : Stages of Economic Integration Common Market Monetary Union Economic Union

Major Events in European Economic Integration : Major Events in European Economic Integration Treaty of Rome (1957) European Monetary System (1979) The Single European Act (1987) The Maastricht Treaty (1992) The Monetary Union

The European Monetary System : The European Monetary System The Exchange Rate Mechanism 2.5% 2.5%

The Single European Act : The Single European Act Eliminate non-tariff barriers to trade dumping production requirements subsidies national regulations classification quotas ‘buy national’ policy

The Single European Act : The Single European Act Harmonization of national legislation - the early stages Attempts to equalize standards and regulations Frustration Economic decline The need for a new approach

The Single European Act : The Single European Act Mutual recognition of standards greater reliance on national standards harmonization in limited areas examples: Cassis de Dijon German beer purity law chocolate content

The Single European Act : The Single European Act Simplified decision-making procedures qualified majority voting replace unanimity Set the timetable for single market completion

The Three Stages of the EMU : The Three Stages of the EMU Stage 1 (1990-1994): free movement of capital; culminated in the Maastricht Treaty The collapse of ERM I Creation of ERM II Stage 2 (1994-1999): created ECB Stage 3 (1999-): fixed exchange rates; launched euro

Structure of the EMU : Structure of the EMU European System of Central Banks (ESCBs) - Tasks ESCB President Governing Council, Executive Board General Council

Criteria for Entry : Criteria for Entry The so called convergence criteria Rate of inflation Level of budget deficit Exchange rate stability Durability of convergence

Living in a Monetary Union : Living in a Monetary Union Before…..

Living in a Monetary Union : Living in a Monetary Union … and After easier travel: Schengen Agreement easier trade

Living in a Monetary Union : Living in a Monetary Union … and After easier travel: Schengen Agreement easier trade more choices in consumer goods more competition in services lower prices telecommunication: 7.5% a year electricity: 6.5 % overall

Living in a Monetary Union : Living in a Monetary Union … and After European Citizenship Single Currency introduced on January 1, 1999 The Eurosystem: European Central Bank and national central banks

Living in a Monetary Union : Living in a Monetary Union … and After - European Citizenship - Single Currency introduced on January 1, 1999 1 January 2002: € Day – Euro notes and coins enter circulation

Living in a Monetary Union : Living in a Monetary Union Practical results of the monetary union - No need to exchange currency when traveling - Easier to compare prices - Reduced bank charges and costs of transfers - Euro accepted outside the Eurozone - Cheaper to do trade - More predictable business environment

Slide24 : Traveling in the European Union

Slide25 : Traveling in the European Union It is easy - Driver’s license - Access to healthcare - Mobile phone

Slide26 : Studying in the European Union

Slide27 : Studying in the European Union - Information: find out with Ploteus - Students and teachers: Socrates - European Credit Transfer System - Diploma supplement

Slide28 : Working in the European Union

Slide29 : Working in the European Union Vocational training with Leonardo da Vinci Europass Training document

Slide30 : Implications for EU’s Global Economic Importance The single largest trading bloc in the world Biggest overall economy Second in terms of per capita wealth Largest trading partner and investor for the US

EU-US Economic Relations : - $ 2.5 trillion a year - 12 million people - 4 times as many sales as to Canada and Mexico - 65 % of US foreign investment - 43 % of US oversees employment EU-US Economic Relations

EU-US Economic Relations : EU-US Economic Relations Ireland or China?

EU-US Economic Relations : EU-US Economic Relations Denmark or India?

EU-US Economic Relations : EU-US Economic Relations The Netherlands or Asia?

EU-US Economic Relations : EU-US Economic Relations Germany or South America?

EU-US Economic Relations : EU-US Economic Relations - Europe invests in the US more than US - in Europe - More Americans are employed by European companies than vice versa

EU-US Economic Relations : EU-US Economic Relations - California - Texas - Southeast US --- Florida Which states matter?

Slide38 : EU-US Economic Relations

Slide39 : Conclusions Tremendous achievements Slow but steady process Countries want to join due to prosperity Increased leverage for the EU Implications from recent enlargement