MqJBL (2008) Vol 5
Marcel Gordon*
Introduction
The European Union is a prominent international actor, in both political and economic fora. Yet for many non-Europeans, the exact identity of the European Union is hard to pin down and the implications of the European Union’s existence are somewhat nebulous. This article looks at the nature of the European Union and its effect on doing business in modern-day Europe.
This article starts by introducing the European Union via its historical roots and core political and economic concerns. It then explores some of the most significant legal ramifications of the European project for carrying on a business in the European Union: the four freedoms; establishment; the Common Commercial Policy; competition; standards; and intellectual property. It concludes with a brief look at what the near future holds for the world's largest market.
History
It is revealing to begin with a contrast. The entity that we know today as the European Union, or more commonly as the EU, began its life with an economic compact between six war-weary European states: France, Germany, Italy, the Netherlands, Belgium and Luxembourg. The six nations came together in Paris in 1952 to create the European Coal and Steel Community (ECSC), promising to organise Franco-German coal and steel production through the establishment of a common market in which other European states could participate1
In 2008, the EU consists of 27 countries – known as Member States – spanning more than 4 million square kilometres and encompassing 493 million people.2 The common market now covers goods and services of all types, and demands the free movement of European citizens and an open labour market. The EU has its own directly-elected parliament,3 a two-tier judicial system4 and a 25,000 strong civil service in Brussels called the European Commission.5 Together with the Member States, these institutions set European-wide rules on issues from workers’ rights6 to the composition of chocolate,7 as well as determining foreign policy8 and controlling Europe’s trade agenda.9 On the international stage, the EU is in many contexts, such as at the WTO,10 treated in the same way as a state.
How has a treaty organising the production of coal and steel become one of the world’s most important political entities? And what sort of entity has it become, exactly? For our purposes, two aspects of the ECSC are salient in understanding this evolution, and through it the modern EU.
First, from the very beginning, the enterprise was linked to higher aims than simple economic development, and the preamble of the ECSC witnesses an ambition inspired by the horrors of the Second World War:11
CONSIDERING that world peace may be safeguarded only by creative efforts equal to the dangers which menace it; CONVINCED that the contribution which an organized and vital Europe can bring to civilization is indispensable to the maintenance of peaceful relations; CONSCIOUS of the fact that Europe can be built only by concrete actions which create a real solidarity and by the establishment of common bases for economic development; DESIROUS of assisting through the expansion of their basic production in raising the standard of living and in furthering the works of peace; RESOLVED to substitute for historic rivalries a fusion of their essential interests; to establish, by creating an economic community, the foundation of a broad and independent community among peoples long divided by bloody conflicts; and to lay the bases of institutions capable of giving direction to their future common destiny…
That vision, surely remarkable in the preamble of a coal and steel treaty, is now expressed in the well-known EU refrain of an “ever closer union”.12 It is the spirit of European integration.
Second, the establishment and maintenance of a common market has been the consistent and unwavering goal of European integration. It emerges from the preamble above, as the means by which peace, freedom and prosperity is to be achieved; and it was further empowered in the Treaty of Rome in 1957, when the ECSC became one facet of the European Economic Community, expanding the common market to cover other realms of economic activity.13 The common market has been the foundation upon which all other endeavours have been built.
There are much more nuanced explanations for the developments of the fifty years between Rome and today,14 but to put it crudely, a common market either demanded or permitted (depending upon one's viewpoint) the development of common rules in relation to a variety of other sectors. From transport to the environment, uniform laws were seen to be necessary to ensure a level competitive playing field. In some cases, uniformity has been achieved by removing disparate national rules (known as “negative integration”). Here the European Court of Justice (ECJ) has played a central role by holding national laws to be incompatible with the European treaties. In other areas, the EU has specified out common rules by way of its legislative process (known as “positive integration”). The quest for uniformity has been marked by a constant struggle to find a politically stable and constitutionally effective balance between the regulatory autonomy of the Member States and the centralising demands of integration.
The number of countries involved in the enterprise grew steadily as the common market grew in importance. Denmark, Ireland and the United Kingdom joined in 1973 (the UK having been rebuffed twice before at French insistence), followed by Greece in 1981, Spain and Portugal in 1986, Austria, Sweden and Finland in 1995, Cyprus, Malta, Slovenia, Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary in 2004, and finally Romania and Bulgaria in 2007. All of these countries have committed to opening up their markets to the rest of Europe and complying with the associated rules.15
Promulgating common rules requires an institutional structure. The gradual changes in the name of the entity we are talking about can be mapped to changes in its organisation and institutions, by way of successive treaties. The Single European Act, signed in 1986, added foreign policy competence to the European Economic Community established in Rome, allowing it to act on the international stage where the Member States so desired (and could agree).16 In 1992 the EU came into existence with the Treaty of Maastricht.17 The EU is the gathering of all the Member States. It has three components, known as “pillars”: the common market (renamed the European Community (EC), incorporating most aspects of the European Economic Community); the Common Foreign and Security Policy, under which the Member States discuss, agree on and execute foreign policy; and Justice and Home Affairs, now known as Police and Judicial Cooperation.18 In a sense, the European Economic Community became a component – the first pillar – of a greater construction, the EU. This three pillar structure has survived until the present, but the recently signed Treaty of Lisbon will, if it comes into force, tear down the pillars, leaving just the EU containing all those facets (and a little more).19
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