More Efficient Trading System Economics Essay
The creation of the European Union gave Europe a more stable currency, more efficient trading system, and increased influence on international politics. The European Union can celebrate its 53rd birthday with many nations around the world, as publics both inside and outside of Europe tend to view the introduction of the union positively. So had this evolutionary system created in 1993 done what is today being praised around the world? The European Union’s image contrasts starkly with that of the United States: the same poll that found the EU favorable, found that the United States’ influence is view more negatively in 24 of the 27 countries polled (Word Publics 1).
The European Union has created a system that has unifies all of Europe through economic and foreign policy that benefits all members. The cause of cooperation on economic policy is created in the economic and monetary union, of which all Union countries are part. The overall result of the euro is increased growth, jobs and a higher level of social welfare for all. In addition, this alliance enables the European Union to react to global economic and financial challenges in a coordinated way (Werner 2). It makes the European Union a self sustaining economic organization that is more resilient to economic shocks externally and enables the union to deal with economic and financial problems internally more effectively (Cameron 1). Foreign and security policy is one area where ultimate authority remains individually with member governments, although the European Commission and, to a lesser extent the European Parliament, are associated with the process, final decisions are made by independent states (Cameron 1). Key decisions though are made by a unanimous member vote (Directorate 3). Aware of this restriction, the European Union has introduced more flexible voting processes on CFSP policy making procedures by “allowing individual governments to abstain, or by using majority voting, or by allowing a majority of countries to act on their own; but a unanimous vote is still required on decisions with military or defense implications.” Although foreign policy is left up to the individual state, most members side with the majority of the European Union because of the large webbed network of trading systems and internal relations between each member state. All members have trading agreements, a uniform monetary unit, and shared citizenship creating a positive relationship between each member. Severing this bond because of independent foreign policy would destroy the benefits received by joining the European Union (Europa 1), damaging the country’s economy and international relations, making it not worth the risk.
Having the euro as a common currency of the European Union has created more stability and unity among members. Before France adopted the euro, their monetary unit, the franc, had an exchange rate of 3.6164 for every one dollar (Antweiler 1). Currently, the exchange rate for the euro is .75 for every one US dollar (Antweiler 1). In addition to creating a more stable and valuable monetary unit, the Euro has made it less complicated for the European Union to react quickly to the global credit crunch in a coordinated way that otherwise would not have been possible (Europa 6). For example, as the ECB is able to “reduce interest rates for the entire euro region,” as opposed to each country setting a different exchange rate, banks throughout the European Union now have the same conditions for borrowing and lending to each other (Levitz 10). The ability to respond quickly to credit changes, in addition to the positives of lending the euro, has supported the overall unification of Europe in their interrelations with each other. The euro is used daily by more than sixty percent of European citizens (Massey 7). All members of the European Union have benefited from the single currency system. The cost of making cross-border payments, exchanging money when traveling or doing business, has in most cases either disappeared or been reduced significantly, businesses and consumers can compare prices more quickly, which promotes competition in the market and exports from member countries. Acquiring the euro is “a guarantee of price stability” (Europa 1). The ECB sets key interest rates at levels designed to keep euro area inflation below two percent (Directorate 5). It also manages the European Union’s foreign exchange reserves and can intervene in foreign exchange markets to influence the exchange rate of the euro.
All European Union members are required to use the euro as their currency, but only when each individual country is ready (Single Market 1). The countries that became European Union members in 2004 and 2007 are therefore gradually acquiring the euro, though Denmark and the United Kingdom are not required to use the euro due to special political agreements. To join the European Union, each country two years prior must have a stable exchange rate. Other conditions must also be fulfilled but relate to “interest rates, budget deficits, inflation rate” (Europa 1). The ECB not only has the role of keeping market prices constant, but also of “ensuring that cross-border euro transfers are as cheap as possible for banks and their customers” (Europa 1).
The single market is the core characteristic of the European Union. Yet creating such an innovative system, such as the single market, with so many diverse cultures took several years. As Jaques Delors said, “Of course, the process of opening up Europe is far from complete and much work remains to be done. “Not all the principles behind the single market are yet fully applied in practice” (Europa 3). However already, the single market system has altered many aspects of European life for the better. And the success of the single market system in the last decade or so is not purely an economic one. Without losing any of their national and cultural characteristics, citizens of each of the members have also become citizens of Europe (Directorate 3).” In each nation there were hundreds of laws that needed to be swept away, including the technical, regulatory, legal and bureaucratic barriers, because they all limit free trade and free movement, which was finally approved in 1993. Free trade is one of the greatest features of the single market system. Each state shares resources with each other and contracts for certain resources in return. According to the Commission, the single marked has created several million jobs since its launch and generated more than €800 billion in extra wealth (Single Market 1). Phone calls cost now a fraction of what they did ten years ago, also many air fares in Europe have fallen significantly and new routes have opened. Households and businesses are also able to choose now who supplies them with electricity and gas (Levitz 5). The single market system has created a more efficient economic system while also unifying Europe.
Foreign policy is perceived as the foundation, aspirations, set of objectives and grand design from which diplomacy operates. While diplomacy is the main tool of foreign policy, it also acts as an independent institution of the state’s power (Europa 6). European Union diplomacy comprises the Union’s common foreign and security policy. The need to create both community and intergovernmental institutional structures aimed at strengthening the unity of the European Union in the volatile post Cold War environment began to gain momentum in the early 1990s. At both the Council and Commission levels, appropriate structures were set up to meet growing European Union’s aspirations in world relations (Directorate 8). These structures were designed to coordinate the Union’s external action and to constitute the nuts and bolts of the European Union’s diplomatic system. The action plan to put diplomatic policy in place consisted of all members needing to agree on policy decisions before treaties and bills are put in place. The ability of the European Union member-states to agree on a common position, set a common strategy, and execute a common action, directly influenced the efficiency of European Union diplomacy. Though, all members need to consent, most European Union countries do not have independent foreign policies. Most member states hold neighborhood policies, which may or may not drag them into some nasty quarrels that make little sense to outsiders (Directorate 13). For most European countries, the idea of European Union embassies and treaties taking over their minimal interests around the rest of the globe sounds “both cheaper and more politically rewarding than going it alone.” Logically, it is clear that there is no reason for a single small European state to have a foothold in international relations when all small states can ban together as a union and make international decisions together, holding much more weight than those made separate from the union (Levitz 8). The establishment of European Union decision-making processes though, including those in the field of foreign policy, has been as sluggish and ongoing as the process of European integration itself. This evolutionary union has created policy that opens a window for smaller member nations to influence world relations (Cameron 7).
The European Union has become the result of a community using evolutionary intergovernmental instruments to further their influence on the world and create a unified Europe. Before the establishment of the European Union, countries had strict trade and economic policies creating a fragmented continent. With the issuance of a common currency and free trade policies, Europe has become a more efficient and unified region. Smaller nations have been able to leave foreign policy to the entire Union creating more time for them to concentrate on their own nation. Each nation has also banned together to create a much larger presence in international policy. The creation of the European Union introduced Europe to not only a monetary unit that created unity and stability, but a more efficient single market system, and unity and efficiency in international politics.
