European Integration should be thought of as occurring in three interrelated ways:
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Occurs through the reduction of all obstacles to
trade and to the free flow of
labor across countries.
- When a group of countries abolishes all restrictions to trade and the free flow of capital and labor among themselves, they participate in what is called a common or single market.
- European economic integration began in 1951 when trade restrictions on coal and steel were dropped between Belgium, Germany, France, Italy, Luxembourg, and the Netherlands.
- Trade and mobility restrictions continued to fall until the eventual formation of the EU in 1993 (click here for the history).
The advantages of becoming a member of a single market are the same as those of increasing
international trade :
- Greater specializations and more efficient use of economic resources.
- Cheaper products (through imports and increased competition).
- Easier access to foreign markets in which the home producer can sell.
The disadvantages of joining a single market are the same as those of increasing
international trade :
Loss of businesses that are not competitive in the world market.
- Example: The decline of the textile industry in North Carolina once trade restrictions were lifted with Mexico and a number of Asian countries.
Increased migration of workers from poor to rich countries as they search for relatively high paying jobs.
- Although increased migration is actually a good thing in economic terms, it can be disruptive to the social fabric of both countries.
- Possibility ofgreater inequality.
- Loss of businesses that are not competitive in the world market.
In general, the benefits of joining a single market outweigh the costs for a country as a whole.
- Amy Medearis of the European Commission reports that GDP in the EU increased nearly 900 billion € over the 10-year period of 1992-2002 (over $1 trillion) and 2.5 million jobs were created as a result of the single market.
- Occurs with the adoption of a common currency and the formation of a monetary union.
- This is a logical step after the formation of a single market, as it reduces the final obstacle to free trade: having to exchange one country's currency for another's.
- Those EU countries that have decided to adopt the euro as a common currency have formed the European Monetary Union (EMU) and are called the Euro zone or Euro area.
- In general, for current members, the benefits of becoming a member of the EMU have outweighed the costs.
- Occurs when countries come together to form common political policies and share political institutions.
- This is also seen as part of a logical progression once countries become more and more economically integrated, though it is not an inevitable step.
Some advantages of greater political integration include:
- Greater political clout in international affairs.
- Easier administration of the union.
Some disadvantages of greater political integration include:
- Surrender of some political power at the individual country level, hindering the country's ability to pursue its own foreign policy as well as restricting how it conducts domestic policy.
- With the inception of the EU, a union-wide political and decision making structure was created. Some believe that the current system is inefficient and in need of revision in order to meet the challenges of an expanded unified Europe.
Steps toward institutional reform improve the current system and further political integration
have met considerable opposition.
- The first attempt at ratifying an EU-wide constitution was halted after voters in France and the Netherlands voted against it in 2005.
- The Lisbon Treaty was drafted in 2007 as a revised constitution, but it too was voted down by Ireland in 2008 in the treaty's only public referendum
- Fearing a public 'no' vote, every other country in Europe, ratified the treaty in their respective Parliaments. Ireland's constitution, however, did not allow this.
- The Irish public ratified the Lisbon Treaty in a second referandum held in October 2009