European Integration

Table of Contents

• Introduction In 1945 Europe lay in ruins. 50 million soldiers and civilians had lost their lives in a conflict that dwarfed even the First World War in its level of death and destruction. But, whereas World War 1 exacerbated nationalism and ideological extremism in Europe, World War 2 had almost the opposite effect. People in different parts of Europe began to dream of a different kind of Europe. Many were from Europe's linguistic and political borderlands − Schuman from Lorraine, Adenauer from the Rhineland, De Gasperi from northern Italy, Spaak from bilingual Belgium. Europe's diversity thus helped foster its impulse to unite. One of the first initiatives was the European Coal and Steel Community (ECSC) established by the Treaty of Paris in 1951. On 9 May 1950 Robert Schuman, the French Foreign Minister, proposed that French and German coal and steel production should be 'pooled'. Belgium, Italy, Luxembourg and the Netherlands joined France and Germany in setting up the ECSC and merging national interests in these industries. In 1957 the six members of the ECSC formed the European Economic Community (EEC) and began the process of developing a common market for goods and services. The Treaties of Rome, signed in March 1957, created the EEC and the European Atomic Energy Community. The Common Agricultural Policy to support farmers was established. Since 1957, the EEC has seen four stages of enlargement, and now brings together 15 countries in what is known as the European Union (EU). Denmark, Ireland and the United Kingdom joined in 1973; Greece in 1981; Portugal and Spain in 1986; and Austria, Finland and Sweden in 1995. Another notable development took place in 1987 with the coming into force of the Single European Act which set out the timetable for the creation of the Single Market by 1993. This brought about the world's largest trading area of 370 million people and the free movement of goods, capital, people and services. The term "European Union" was introduced by the Maastricht Treaty in November 1993. The Treaty established new areas of European co−operation in foreign and security policy, and justice and home affairs. The new Treaty also set out a timetable for economic and monetary union and the introduction of a single currency. The Treaty of Amsterdam introduced further changes in 1999. In particular, the powers of the European Parliament were given a major boost and increased co−operation in foreign policy and home affairs was established. Twelve countries have adopted the Euro, the new European currency. Euro notes and coins will be introduced in 2002. Three EU countries − Denmark, Sweden and the UK − remain outside the Eurozone. Further enlargement of the European Union is on the cards as another thirteen countries from Central and Eastern Europe and the Mediterranean have applied to join. In order to allow the EU to function effectively with a much larger membership, the fifteen member states agreed to a new EU Treaty in Nice in December 2000.

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• European Integration since 1951 • The first three Treaties The Treaty of the European Coal and Steel Community (ECSC), or Treaty of Paris, was signed on 18 April 1951 and came into force on 25 July 1952. For the first time, a group of states agreed to work towards integration. The Treaty made it possible to lay the foundations of the Community by setting up a 'High Authority', a Parliamentary Assembly, a Council of Ministers, a Court of Justice and a Consultative Committee. The Treaties of the European Economic Community (EEC) and the European Atomic Energy Community (EAEC, otherwise known as 'Euratom'), or the Treaties of Rome, were signed on 25 March 1957 and came into force on 1 January 1958. Although the EAEC Treaty was concluded for 50 years (Art. 97), the Treaties of Rome were concluded 'for an unlimited period' (Art. 240 of the EEC Treaty and Art. 208 of the EAEC Treaty), which gives them almost a constitutional character. The preambles of the three Treaties reveal a unity of purpose behind the creation of the Communities, namely, the conviction that the states of Europe must work together to build a common future, as this alone will enable them to control their destiny. The European Communities (the ECSC, EEC and Euratom) were born of a gradual process of thinking about Europe, an idea that was closely bound up with the events that had shattered the continent. In the wake of the Second World War the major industries, in particular the steel industry, needed reorganising. The future of Europe, threatened by East−West confrontation, lay in Franco−German reconciliation. The appeal made by Robert Schuman, the French Foreign Minister, on 9 May 1950 may be considered as the starting point for the Community. At that time, the choice of coal and steel was highly symbolic: in the early 1950s coal and steel were still seen as vital industries, the basis of a country's power. In addition to the clear economic benefits to be gained, the pooling of French and German resources was to mark the end of antagonism between the two countries. On 9 May 1950 Robert Schuman declared: 'Europe will not be built in a day nor as part of some overall design; it will be built through practical achievements that first create a sense of common purpose'. It was on the basis of that principle that France, Italy, Germany and the Benelux countries signed the Treaty of Paris, of which the main points were: • The free movement of products and free access to sources of production; • Permanent monitoring of the market to avoid distortions which could lead to the introduction of production quotas; • Respect for the rules of competition and price transparency; • Support for modernisation and conversion Following the signing of the treaty, although France was opposed to the reconstitution of a German national military force, René Pleven envisaged the formation of a European army. The European Defence Community (EDC) negotiated in 1952 was to have been accompanied by a political Community (EPC). Both plans were shelved following the French National Assembly's refusal to ratify the treaty on 30 August 1954 The Euratom Treaty laid down highly ambitious objectives, including the `speedy establishment and growth of nuclear industries'. However, owing to the complex and delicate nature of the nuclear sector, which touched on the vital interests of the Member States (defence and national independence), the Euratom Treaty had to scale down its ambitions. • Developments up to the Single European Act Article 8 of the Treaty of Rome provided for completion of a common market over a transitional period of 12 years, in three stages ending on 31 December 1969. Its first aim, the customs union, was completed more 2

quickly than expected. The transitional period for enlarging quotas and phasing out internal customs ended as early as 1 July 1968. By the same date Europe had adopted a common external tariff for trade with third countries. `Green Europe' was the second major project for European integration. The first regulations on the CAP were adopted and the European Agricultural Guidance and Guarantee Fund (EAGGF), was set up in 1962. Having settled the Community budget dispute of the early 1980s the European Council decided at its Fontainebleau meeting in June 1984 to set up an ad hoc committee of the personal representatives of the Heads of State and Government, known as the Dooge committee after its chairman. The committee was asked to make proposals for improving the functioning of the Community system and of political cooperation. It drew up an interim report for the European Council meeting in Dublin in December 1984. The report proposed a major step forward in qualitative terms, particularly in the institutional sphere. The Dublin European Council said the committee should continue to work towards a consensus, as three of the ten representatives had expressed serious reservations about the text of the report. But the European Council in Milan in June 1985 decided by a majority vote (of 7 to 3, an exceptional procedure in that body) to convene an intergovernmental conference to consider the powers of the Institutions, the extension of Community activities to new areas and the establishment of a 'genuine' internal market. On 17 February 1986 nine Member States signed the SEA, followed later by Denmark (after a referendum voted in favour), Italy and Greece, on 28 February 1986. The Act was ratified by Member States' parliaments during 1986, but because a private citizen had appealed to the Irish courts its entry into force was delayed for six months, until 1 July 1987. The SEA was the first substantial change to the Treaty of Rome. Its main objectives were: • Creating a large internal market by 1 January 1993; • Increasing the role of Parliament in order to rectify the democratic deficit in the Community's decision−making process; • Improving the decision−making capacity of the Council of Ministers. • The Maastricht Treaty The Maastricht Treaty marks a new step in the process of creating an ever−closer union among the peoples of Europe. It was based in three pillars: The European Community (first pillar) The Community's task is to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non−inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of environmental protection, the raising of the standard of living and quality of life, economic and social cohesion and solidarity among Member States. The common foreign and security policy (CFSP) (second pillar) The Union has the task of defining and implementing, by intergovernmental methods, a common foreign and security policy. Its objectives are: ♦ To safeguard the common values, fundamental interests, independence and integrity of the Union, in accordance with the principles of the United Nations Charter; ♦ To preserve peace and strengthen international security, in accordance with the principles of 3

the United Nations Charter as well as the principles of the Helsinki Final Act and the objectives of the Paris Charter, including principles relating to external borders; ♦ To promote international cooperation; ♦ To develop and consolidate democracy and the rule of law, and respect for human rights and fundamental freedoms. Cooperation in the fields of justice and home affairs (third pillar) The Union's objective is to develop common action in these areas by intergovernmental methods. It covers the following areas: ♦ Rules and the exercise of controls on crossing the Community's external borders; ♦ Combating terrorism, crime, drug trafficking and international fraud; ♦ Judicial cooperation in criminal and civil matters; ♦ Creation of a European Police Office (Europol) with a system for exchanging information between national police forces; ♦ Combating unauthorised immigration; ♦ Common asylum policy. • The Amsterdam Treaty Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and certain related acts, signed in Amsterdam on 2 October 1997; it came into force on 1 May 1999. The Treaty of Amsterdam amends and amplifies the content of the Maastricht Treaty in five main areas: ♦ Freedom, security and justice; ♦ Citizenship of the Union; ♦ External policy; ♦ EU Institutions; ♦ Closer cooperation. The Amsterdam Treaty represents substantial progress on the 'constitutional' bases of EU and Community policies and the process of democratisation. However, it does not include all the institutional reforms which enlargement will render necessary. While removing the much−criticised social policy opt−out, the new Treaty lays the foundation for closer cooperation between some Member States within the framework of EU Institutions. It has also simplified the Treaties to a certain extent, in particular by renumbering the articles. • Towards Monetary Union EMU means Economic and Monetary Union. This is the central commitment of the Maastricht Treaty. The EU passed the Single European Act in 1987. The concept behind this act was to create a single market, which took effect on the 1st January 1992. However in order to further deepen the concept of a single market, the EU passed the Maastricht treaty in 1993. This treaty, in effect, made the euro a reality. A timetable and entrance criteria were set−up. It is hoped that the criteria set out by EMU would mean that countries that pass are dedicated and motivated to stay and adhere to the rules of the EU. The criteria took two forms: Economic criteria: Economies had to adhere to certain financial control over their economy. Greece did not meet these criteria, even though the country wanted to be part of the EMU. 4

♦ Inflation: Reference value to be kept below 2.4% ♦ Government Defect: Reference value to be kept below 3% of GDP ♦ Exchange rate: A currency must stay within the upper and lower bands of 15% of its central rate. ♦ Long−term interest rates: Average long−term interest rate to be kept below value of 7.2%. Political factors. Basically, a country would have to agree to passing over control of its economy to the European Central Bank (ECB). And secondly, to give up its national sovereignty. Great Britain, Denmark, and Sweden decided not to enter EMU on these two points. The Maastricht treaty in 1992 set the timetable for the euro. Phase A; Interim Period From early 1998 ♦ Decide on Participating Countries ♦ Establish European Central Bank (ECB) ♦ Agree on dates for Phases B and C ♦ Commence production of notes and coins Phase B; Transitional Period 1st Jan 1999 to 31st Dec 2001 ♦ Conversion rates for Euro zone countries fixed ♦ Exchange rates for Euro zone countries disappear ♦ Euro money markets in place ♦ Legislation in force ♦ Rule− no compulsion, no prohibition ♦ Some dual pricing Phase C; Dual Circulation Peirod 1st January 2002 to Feb 9th 2002 ♦ Euro notes and coins come into circulation ♦ Withdrawal of Irish notes and coins ♦ From midnight of Feb 9th, Irish notes and coins no longer legal tender This convergence was achieved by eleven of the now 15 states in 1998. (Greece had joined in 1981, Spain & Portugal in 1986, and Austria, Finland and Sweden in 1995). The UK, Greece, Sweden and Denmark were not to be in the inner circle that was planning to give up their currencies, although Greece subsequently met the criteria for joining. From 1 January 1999 the currency exchange rates between the 11 were fixed. They issued any public debt in Euros, and the European Central bank set interest rates on behalf of them all. • European Enlargement The fifth EU enlargement since 1972 is, in the view of the European Parliament, a unique task of an unprecedented political and historic dimension, which provides an opportunity to further the integration of the continent by peaceful means. As the President of the European Parliament Nicole Fontaine stated in her speech at the Nice European Council meeting in December 2000, "Ultimately, the enlargement must be seen in a broader context, that of the reunification of the entire European family against a background of shared democratic, economic, social and cultural values." Thirteen countries are candidates to join: Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, the Slovak Republic and Slovenia and Turkey. The Luxembourg Summit of December 1997 decided to launch the enlargement process and open negotiations with six applicant countries. On 31 March 1998, accession negotiations were started with 5

Hungary, Poland, Estonia, the Czech Republic, Slovenia and Cyprus. At the Helsinki Summit on 12 December 1999, the Member States decided to open negotiations with Romania, the Slovak Republic, Latvia, Lithuania, Bulgaria and Malta. The negotiations were opened with these countries on 15th February 2000. At this meeting Turkey finally achieved "candidate" status but no date was set for opening accession negotiations. As early as December 1997, in its Resolution on the Communication from the Commission Agenda 2000 for a stronger and a wider Union and in its Resolution on the Conclusions of the Luxembourg European Council the European Parliament insisted on an inclusive enlargement strategy, implying the involvement of all applicants in the accession process, which was essential to avoid negative side−effects in certain applicant countries. It took the view that each country should be judged according to the progress of its negotiations, and that a flexible process of enlargement would be possible, progressing with negotiations at a pace, which is appropriate for each country. It was the European Parliament that urged Council in its Resolution on the preparation of the meeting of the European Council in Helsinki on 10 and 11 December 1999 to adopt the Commission's proposals that accession negotiations should start in the year 2000 with all remaining candidate countries that fulfil the Copenhagen political criteria. It urged the European Council "to put an end to the invidious divide between two classes of applicant countries and to adopt the recommendations made on 13 October 1999 by the Commission, bringing its policy into line with Parliament's 'regatta' model, opening the prospect of a fully flexible, multi−speed accession process, based exclusively on merit". Throughout the year 2000 the EP stepped up its activities considerably. On 4 October 2000 the annual debate on enlargement took place, resulting in the adoption of The Enlargement Resolution, tabled by Elmar Brok, Chairman of the Foreign Affairs Committee. The resolution called for a dynamic negotiating process, which would allow the citizens of the new Member States concerned to participate in the next European Parliament elections when they take place in 2004. • Treaty of Nice The signing of the Treaty of Nice marks the completion of the Intergovernmental Conference opened on 14 February 2000. The aim of this conference was to adapt the way in which the European institutions operate in order to make it possible for the European Union to take in new Member States. This new Treaty paves the way for the biggest enlargement that the Union has ever contemplated, with its prospects of a lasting peace, stability and prosperity for all the democratic States of Europe. The Treaty of Nice does not mark the end of the process of change. What will the European Union of tomorrow look like with nearly 30 Member States? The future has not been fully mapped out, and it is up to the peoples of Europe to build that Europe. In Nice, the Heads of State or Government called for a broad and detailed discussion on this question. The citizens of Europe should play a major part in this debate so that they can provide a better indication of their hopes and expectations beyond the Treaty of Nice. The Treaty of Nice marks a new stage in the preparations for enlargement of the European Union to include countries of central and Eastern Europe, the Mediterranean and the Baltic. This Treaty, which amends the existing Treaties, will enter into force once it has been ratified by all the Member States, by parliamentary vote or referendum. The composition and operation of the European institutions and bodies were agreed in the 1950s, when the Union only had six members (Belgium, Germany, France, Italy, Luxembourg and the Netherlands). The Union has since undergone four enlargements and now consists of 15 Member States (the six founding members plus Denmark, Greece, Spain, Ireland, Austria, Portugal, Finland, Sweden and the United Kingdom). Yet, apart from the introduction of 6

direct elections to the European Parliament in 1979, there has been no major reform of the institutions since the founding of the European Community. In all, 12 countries are currently negotiating accession to the European Union: Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia. In addition, Turkey has been recognised as a candidate for membership. The Intergovernmental Conference (IGC), which prepared the revision of the Treaties agreed at the European Council in Nice on 11 December 2000, had to provide an answer to one crucial question: how can Europe function effectively when the number of Member States almost doubles? The challenge the IGC faced was to make a number of much−needed improvements to the institutional framework. • The future of the EU Economic integration is a reality in Europe, and many of the members of the monetary union are already feeling great benefits in low inflation, falling unemployment and increasing standards of living. There are still challenges to be faced. The single interest rate can distort economies, and Ireland has been booming with more than average inflation because it cannot raise interest rates to match its particular circumstances. The Common Agricultural Policy is overdue for change. As enlargement of the EU comes closer, something will need to be done to contain the costs of the CAP. There are also problems in some countries with the potential costs of social pensions provision in aging societies. Perhaps the most difficult next step on the path to economic integration will be with reforming the institutions of the European Union. At the last summit in Nice in December 2000, the members failed to make much progress on a number of measures to make the Commission smaller and more accountable, or to move more towards majority voting. The pressure to retain individual nation's veto on important issues remains strong. The democratic deficit of the EU is a problem. Much of the practical legislation comes from the work of the Commission which is unelected. The Parliament which is elected has little power beyond the ability o dismiss the Commission. Governments are fearful of giving the European Parliament more power for fear of it beginning to be more important than the Council through which they exercise inter−governmental control. If all this seems complicated, w sometimes have difficulty in Europe with working out where the power lies in the US system. If I was to make a prediction for the EU in 20 years time, I think all members will be in the Euro, which will be a strong global currency. The EU, which already has a GDP as large as the US, will be significantly larger and richer given its expansion. It may be as many 30 countries by then. It will be an equal partner with the US in NATO, and the partnership across the Atlantic will be a force for stability and prosperity for the rest of the world. • Factors for continuing development of the EU • Common Foreign and Security Policy (CFSP) European Political Co−operation began in the 1970s and aimed to give a political dimension to the EU's growing international role. Over time, the added value of Member States speaking with one voice has become increasingly evident. Eventually, the Maastricht Treaty in 1992 set up a formal Common Foreign and Security Policy. This is an inter−governmental area, legally separate from the European Community, although the Commission is fully associated with CFSP. An EU government now exchange views on an hour−by−hour basis and the EU reaches common positions on all key foreign policy issues.

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When the Amsterdam Treaty came into force in May 1999, it included measures to strengthen CFSP. In particular, a new post was created of High Representative for CFSP, to co−ordinate CFSP and act as a public face for EU foreign policy world−wide. The first High Representative is Javier Solana, formerly Secretary−General of NATO. The European Union is emerging as a major political player on the world stage. Dialogue on political issues takes place at all levels. Regular summit meetings at head of state level are held with key partners such as the United States, Japan, Russia and, most recently, China. The President of the Council of Ministers and the President of the Commission represent the EU in these meetings now joined by the High Representative. Under the CFSP, Member States co−ordinate an EU position on a range of pressing foreign policy issues. Respect for human rights is an EU priority across the globe − frequent formal protests are made to express concerns to third countries. • Agricultural and Rural Development The Common Agricultural Policy (CAP) is one of the most important and expensive European policies. The basic goals, which remain unchanged since the 1960s are to promote improved productivity in the sector and ensure a stable food supply. These are pursued whilst balancing the consumer interest in reasonable prices with the farming interest in maintaining and improving incomes. The CAP has been funded from what is known as the European Agricultural Guidance and Guarantee Fund. Traditionally, the vast bulk of resources were devoted to guaranteeing a price for farm produce by intervening in the market. This approach resulted in the EU budget paying to take agricultural produce off the market and into storage. In recent years other mechanisms have included capping production through quotas (e.g. in the milk sector) or by "setting aside" land as well as increased use of direct income support to farmers. Resources have also been devoted to agricultural development and diversification under Structural Funds. Further reform was seen as essential − not just to modernise the CAP which already serves agriculture from northern Finland to Southern Portugal but also to prepare for enlargement of the EU to include the countries of Central & Eastern Europe. Even after recent reforms, the CAP still takes up over 40% of EU expenditure. Consumers complained that the system of ensuring farm income by guaranteeing a price per product has meant prices have been kept unnecessarily high. On the other hand, the proportion of EU GDP devoted to agriculture is not untypical of what many national governments have chosen to spend on agriculture in the past. Countries outside the EU (including neighbours like Switzerland and Norway, Japan and the US) still spend a comparable proportion. The CAP has traditionally assumed that helping farmers is the best way to help rural communities. It has had limited success in reversing the trend of rural depopulation and doubts have been expressed about whether large subsidies for big, productive farms have really benefited communities in rural areas. So policy has shifted towards a better balance between supporting farmers and developing the rural community as a whole. The enlargement of the EU to Central and Eastern Europe will bring a number of heavily agricultural and relatively poor economies into the EU. The CAP has to be adaptable enough to incorporate these countries without de−stabilising agriculture either in the existing EU 15, or in the new Members. 8

• Common Commercial Policy The Community has exclusive responsibility for the common commercial policy (Article 133 of the EC Treaty, formerly Article 113). Under the policy a customs union has been established between the Member States of the Community, with uniform principles governing changes in tariff rates, the conclusion of tariff and trade agreements with non−member countries, import and export policy, etc. Decisions are taken by qualified majority in the Council. The Treaty of Amsterdam amended Article 113 to allow the Council, acting by unanimous vote, to extend the scope of the common commercial policy to international negotiations and agreements on services and intellectual property. To ensure that the accession of new Member States does not block application of this provision, the Commission has proposed to the Intergovernmental Conference launched in February 2000 that the common commercial policy should be extended to the agreements in question. • Competition Policy and State Aids EU Competition Policy aims to guarantee an undistorted Single Market. The Treaty of Rome recognised that a common competition policy was essential if the consumer was to enjoy the benefits of European economic liberalisation. The rules apply to all companies operating in the Single Market, irrespective of their ownership. While Member States have their own bodies to enforce national competition laws, the European Commission investigates breaches of the competition rules. The Commission has significant powers including imposing fines, forcing changes in merger agreements and blocking state aid. Decisions can always be challenged in the European Court of Justice. EU competition policy covers the following situations: ♦ Abuse of a dominant position: this principle is laid down in Article 91 of the EU Treaty. Enjoying a large share of the market does not, in itself, bring an economic operator into conflict with competition rules. However, there are many examples of ways in which companies abuse a dominant position. These include making customers pay unfairly high prices or squeezing out smaller competitors through predatory pricing. Equally, dominant positions can be abused through distribution arrangements such as exclusive dealerships or imposed customer "loyalty" contracts. ♦ Anti−competitive agreements between companies: this principle is laid down in Article 92 of the EU Treaty. Companies in a given sector may choose to co−operate rather than compete with their rivals. They may collude in cartels to try to fix prices or carve up markets. Selective distribution systems are also potentially anti−competitive − although agreements between manufacturers and dealers can be justified in the interests of efficiency or through the provision of high quality after−sales service. They should not prevent consumers in one EU Member State buying a product in another where the price is cheaper. Certain industries rely on co−operation between competitors and the Commission has the power to lay down the conditions for such agreements to be considered compatible with the competition rules automatically (so−called "Block exemptions"). ♦ Mergers and takeovers: the most recent addition to the EU competition policy came in 1990. The Commission was entrusted with the role of controlling mergers and takeovers, which could restrict competition in the Single Market. This is limited to companies over a 9

certain turnover size − though this is irrespective of ownership, and can even cover mergers between two non−EU companies. The Commission has the power to block mergers, or to impose conditions such as the sale of assets to prevent creation of a dominant position. ♦ State aids: decisions by Member States' Governments can also restrict or distort competition in several ways. Member States may be tempted to subsidise national firms to help them face competition from other parts of the Single Market. In most cases, state aid is deemed justifiable. This includes promoting the economic development of disadvantaged areas, culture and heritage conservation and projects of common European interest. But the Commission has the power to block, or to enforce the repayment, of aid. Particular emphasis has been placed on state owned companies subsidised to compete with private sector rivals. ♦ Development Policy The EU is strongly committed to providing aid and technical assistance for economic development. The Union and its member states are now by far the largest aid donors in the world. Trade relations are characterized by the Generalized System of Preferences (GSP) under which developing countries are allowed duty−free exports of a large range of finished and semi−finished goods to the Union. The Lomé Conventions link the EU to 71 African, Caribbean and Pacific (ACP) countries, which act as a group in a stable legal framework for development cooperation and dialogue. Under the Fourth Lomé Convention, aid from the EU and its member states approached US$19 billion for 1996−2000 and amounted to US$15 billion for 1990−1995. The Convention allows ACP countries to benefit from duty free exports into EU countries for 94% of their exports with no reciprocal concessions for EU exports. The Lome Conventions also provide for the stabilisation of export earnings through the STABEX mechanism and maintenance ACP countries mineral export potential through the SYSMIN mechanism. On 23 June 2000, the Community and its Member States signed a new twenty−year partnership agreement with 77 ACP Group states thereby replacing the Lome Convention, which expired. The Cotonou Agreement replaced the Lomé Convention, which had provided the structure for trade and co−operation between them and the Community since 1975. Focusing on poverty reduction as its principal objective, to be achieved through political dialogue, development aid and closer economic and trade co−operation, this agreement will shape a significant part of the European Union's dealings with the rest of the world. It also reflects the Union's reach both as the leading international trading partner and the world's main provider of official development assistance, with a European Development Fund of EUR 13.5 billion for the initial five−year period. ♦ Employment Policy Since 1997, unemployment in Europe has been on the retreat. Despite this improvement, job creation remains one of the Union's key objectives. A high level of employment is a prerequisite for social justice and social cohesion. According to Eurostat, average unemployment in the European Union was 9% in January 10

2000. An estimated 15.5 million persons were unemployed, as opposed to almost 18 million in 1997. The improvement in the job situation in Europe is partly due to faster growth since 1997 (2.5% growth in 1997, as opposed to 1.8% in 1996, which was confirmed in 1998 (2.6%), in spite of a slowdown in 1999 (2.1%)), and partly to the various actions taken in the framework of the European employment strategy. The Community employment strategy was worked out at the Luxembourg, Cardiff and Cologne European Councils. During these summits the Heads of State and Government of the 15 Member States stressed their commitment to combating unemployment. A new employment title was introduced by the Amsterdam Treaty, according to which promotion of employment is a "matter of common concern" of the Member States and one of the Community's goals. In order to make the most of these new provisions, the Heads of State and Government decided to immediately apply the new provisions introduced by the Amsterdam Treaty in support of the coordinated employment strategy, without awaiting their entry into force on 1 May 1999. ♦ Research and Development The European Union promotes scientific research and technological development by funding collaboration between universities and research establishments across Europe. The broad aim of strengthening the technology base of European industry was set out at the same time as the idea of creating the single market in 1986. Since that time, EU research and development policy has been set out in multi−annual "Framework Programmes", each of which have had the following elements: ◊ Thematic programmes − outlining the key priority areas eligible for funding; ◊ International cooperation − with institutions in countries outside the European Union; ◊ Improving mobility and training of the EU's researchers; and ◊ Disseminating results to maximise industry's use of pre−competitive research. Over the period 1994−1998, the 4th Framework Programme's priority themes were information and telecommunications technologies, environmental research, biotechnology and health, transport systems and the impact of technology on society. It accounted for around 4% of publicly funded research in the EU. Small and medium−sized enterprises (SMEs) were identified as a key target for the dissemination process. In addition to collaborative research, the EU's Joint Research Centre (JRC) carries out basic research in the fields of nuclear safety, remote sensing (by satellite), materials research, environment, information technology and systems engineering. Formally reporting to the European Commission, this research is carried out in Geel (Belgium), Karlsruhe (Germany), Seville (Spain), Ispra (Northern Italy) and Petten (the Netherlands). In addition, the Joint European Torus in Culham, Oxfordshire employs some 300 EU and Swiss scientists engaged in developing nuclear fusion technology. In 1998, the 5th Framework Programme was adopted for the four−year period 1999−2002 with a budget of euro 15 billion. The thematic programmes are: ◊ Quality of life and management of living resources (euro 2.4 billion), ◊ The user−friendly information society (euro 3.6 billion), ◊ Competitive and sustainable growth (euro 2.7 billion), ◊ Energy, Environment and sustainable development (euro 3.1billion). 11

♦ Conclusion For centuries, peoples and states have taken up arms and waged war to win control of the European continent. The debilitating effects of two bloody wars and the weakening of Europe's position in the world brought a growing realisation that only peace and concerted action could make the dream of a strong, unified Europe come true. In order to banish once and for all the demons of the past, a start was made with a coal and steel community. Other economic activities, such as agriculture, were later added in. A genuine single market was eventually set up for goods, persons, services and capital. A single currency was added in 1999. On 1 January 2002 the euro will become a day−to−day reality for 300 million European citizens. The European Union has thus gradually come into being. In the beginning, it was more of an economic and technical collaboration. Twenty years ago, the Community's democratic legitimacy, which until then had lain with the Council alone, was considerably strengthened with the first direct elections to the European Parliament. Over the last ten years, construction of a political union has begun. Cooperation has been established on social policy, employment, asylum, immigration, police, justice, foreign policy and a common security and defence policy. The European Union is a success story. For over half a century now, Europe has been at peace. Along with North America and Japan, the Union forms one of the three most prosperous parts of the world. Moreover, the standard of living in the Union's weaker regions has increased enormously, as a result of mutual solidarity and fair distribution of the benefits of economic development. They have made good much of the disadvantage they were at. Fifty years on, however, the Union stands at a crossroads, a defining moment in its existence. The Union is about to expand to bring in more than ten new Member States, predominantly Central and Eastern European, thereby finally closing one of the darkest chapters in European history: the Second World War and the ensuing artificial division of Europe. The unification of Europe is near. At long last, Europe is on its way to becoming one big family, without bloodshed, a real transformation clearly calling for a different approach from fifty years ago, when six countries first took the lead. ♦ Bibliography ♦ Printed Materials ◊ Martin Holland. European Integration: From Community to Union. Pinter Publishers, 1994. ◊ David A Dyker. The European Economy. Longman. Second Edition, 1999. ◊ John McCormick. Understanding the European Union. European Union Series, 2000. ◊ Ali M. El−Agraa. The European Union. Prentice Hall. Sixth Edition, 2001. ◊ John Pinder. European Community: The Building of a Union. Oxford University Press, 1997. ♦ Web Resources ◊ http://www.tgarden.demon.co.uk ◊ http://quaker.org.uk ◊ http://universityforex.com/FOREX_History_EURO.html ◊ http://www.jjb.ie/euro2.html ◊ http://www.gre.ac.uk ◊ http://www.acusd.edu 12

◊ http://europarl.eu.int ◊ http://access−funds.co.uk/Articles/Social_citizenship.html i

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