The European Union

Saturday, January 26, 2013

The EU came into existence on 1st January 1958 with the Treaty of Rome signed by six countries. Now there are 28 member countries, including; France, Italy, Germany, the Netherlands, Belgium, Luxembourg, Spain, Greece, Portugal, the UK, Denmark, Ireland, Austria, Finland and Sweden. 

Aims of the European Union 

  • To remove trade restrictions and to encourage free trade among the member countries 
  • To apply Common External Tariff and a common commercial policy in their trade with non-member countries 
  • To allow free movement of factors of production between member countries 
  • To pursue common policies on agriculture and transport 
  • To allow member countries to compete freely 
  • To create European Economic and Monetary Union (EMU) including the creation of Euro 
  • To increase trade and development of member countries 
  • To develop a common foreign, security and defense policy 

Advantages of EU Membership 

  1. It enables countries to enjoy the benefits of a ‘larger home market’ for their products 
  2. A larger home market enables countries to specialize according to Comparative Advantage 
  3. Countries enjoy economies of scale due to specialization 
  4. Member countries can enjoy the advantages of competition in the form of better quality and lower prices 
  5. It facilitates increased exports due to competition and large scale production 
  6. It assists poor regions within the bloc 
  7. It promotes friendship and cooperation among the member countries 
  8. Member countries can restrict import from non-member countries 

Disadvantages of EU Membership 

  1. Member countries have to use EU produced expensive foods while it could have obtained from other countries at a very lower price 
  2. Member countries loose sovereignty as most of the important economic decisions are taken by the headquarters and not by the respective countries
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