European Union (EU) is an economic and political partnership among 27 European countries. The EU member countries form a single economic market without internal barriers to trade, labor, and investment. The union’s members are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. The union’s principal seat is in Brussels, Belgium. Its judicial seat is in the city of Luxembourg, and its parliamentary seat is in Strasbourg, France.
The European Union has evolved from economic cooperation that began among Western European countries in the early 1950’s. These countries eventually cooperated in economic affairs as members of the European Community (EC). In 1993, the EC members extended their cooperation into the areas of law enforcement and military and foreign policy. The EU was officially created when cooperation was extended to these new areas.
The European Union is a major economic unit. Together, its members have more people than the United States. In addition, the value of the goods and services produced by its members exceeds that of the goods and services produced by every country except the United States and China. In most recent years, the combined value of the union’s imports and exports has been greater than that of any single country in the world. The United States, the United Kingdom, and China are the union’s main trading partners.
Working for cooperation
Internal affairs.
The European Union works to increase economic growth among its members by encouraging trade, investment, and economic competition among them. Union members impose no tariffs on one another and give European citizenship to all their people. European citizenship allows citizens of member countries to live and work anywhere in the union. They may also vote in local and European Union elections in any member country in which they live, even if they are not citizens of that country.
The European Union also fosters economic development by adopting common policies and regulations in such areas as agriculture, transportation, health and safety, antitrust matters, and industrial standards. One such policy, the common agricultural policy (CAP), controls the prices of agricultural goods, limits agricultural production, and gives subsidies (cash grants) to farmers. In addition, the union determines common policies for its members in such areas as immigration and the control of illegal drug trafficking and other international crimes.
The European Union administers programs in education and training and in science and technology. It also provides money for economic development in poorer regions within the union. This aid is aimed at achieving economic and social equality. The union’s revenue comes from a general sales tax, levies on imports from nonmember countries, and contributions from members.
In 1999, many member states began to phase in a single currency, called the euro, as part of a process called European Economic and Monetary Union (EMU). A central bank, known as the European Central Bank, conducts monetary policy for all EMU members. Officials use monetary policy to influence such economic factors as interest rates and the availability of money and loans. Denmark, Sweden, and some eastern European states have not accepted the single currency. The United Kingdom, an EU member from 1993 to 2020, also refrained from adopting the euro.
Twenty European Union member countries have joined the EMU and adopted the euro. In 1999, companies, banks, and stock exchanges in 11 of these countries—Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain—began to carry out many of their noncash transactions in euros. The value of the traditional currencies of each of these countries was firmly tied to that of the euro. In 2001, Greece became the 12th EU member to adopt the euro. The euro began circulating as coins and paper money on Jan. 1, 2002. The traditional currencies of the 12 countries were withdrawn from circulation that same year. Slovenia adopted the euro in 2007. Cyprus and Malta followed in 2008, as did Slovakia in 2009. In 2011, Estonia became the 17th EU country to adopt the euro. Latvia began using the euro in 2014, and Lithuania adopted it in 2015. Croatia began using the euro in 2023.
Relations with other countries.
The European Union is the main partner of the United States in efforts to negotiate and manage world trade rules. The union also cooperates with the United Nations (UN) and such agencies as the International Monetary Fund and the World Bank. The European Union belongs to the Food and Agriculture Organization, a UN agency. The union also gives economic help to struggling nonmember nations.
The European Union sometimes helps resolve the military conflicts of nonmember countries. A defense alliance among several EU nations called the Western European Union performed these duties for many years. The European Union gradually took over these responsibilities in the early 2000’s. The EU also works closely with the North Atlantic Treaty Organization (NATO). NATO is a larger defense alliance among whose members are the United States, Canada, and numerous European countries, including almost all the members of the European Union.
Governing institutions
The European Union is governed by seven institutions. They are (1) the European Parliament, (2) the European Council, (3) the Council of the European Union, (4) the European Commission, (5) the Court of Justice of the European Union, (6) the European Central Bank, and (7) the Court of Auditors.
The European Parliament
shares legislative and budgetary powers with the Council of the European Union. The Parliament has more than 700 members. They are directly elected by EU citizens to five-year terms. The Parliament elects a president from among its members. Most EU laws are adopted jointly by the Parliament and the Council. The Parliament cannot propose legislation, but it can accept, amend, or reject legislation that is proposed by the European Commission. In addition, the Parliament has the power to expel the entire Commission. The Parliament meets in Strasbourg and Brussels. Its secretariat (administrative body) is based in Luxembourg.
The European Council
establishes the general political goals of the EU. It consists of the heads of state or government of each member nation; the president of the European Council; and the president of the European Commission. The European Council elects its president for a term of 21/2 years. He or she must not hold a national office. Meetings of the European Council generally take place four times a year in Brussels.
The Council of the European Union,
also known as the Council of Ministers or simply the Council, is the EU’s main decision-making body. The Council, usually acting jointly with the Parliament, passes laws and adopts the EU budget. The Council coordinates the economic policies of EU member nations, establishes the EU’s common foreign and security policy, and adopts measures relating to police and judicial cooperation. The Council consists of people who serve as cabinet ministers in the government of their home nation. The presidency of the Council rotates every six months among the EU member nations. Most Council meetings take place in Brussels, but some meetings are in Luxembourg.
The European Commission
is the EU’s executive body. It proposes legislation to the Parliament and the Council of the European Union. It also oversees the carrying out of the treaties on which the EU is based, as well as the laws, the budget, and other measures adopted by EU institutions. The Commission consists of one member from each EU member nation. One of the commissioners is the president, and another commissioner holds the position of high representative for foreign affairs and security policy. All the commissioners must be approved by the Parliament. They serve five-year terms. The Commission is based in Brussels and holds most of its meetings there.
The Court of Justice of the European Union,
based in Luxembourg, decides whether the actions of EU institutions and member governments comply with EU law. It also interprets EU law at the request of the national courts. The Court of Justice of the European Union consists of three courts: (1) the Court of Justice, which is the highest court; (2) the General Court; and (3) the Civil Service Tribunal, a specialized court for disputes involving EU employees. The Court of Justice and the General Court include judges from each EU member nation. Judges of all three courts are appointed for six-year terms.
The European Central Bank,
based in Frankfurt, Germany, administers monetary policy for the EU member nations that have adopted the euro as their currency. The bank’s primary objective is to maintain price stability.
The Court of Auditors,
based in Luxembourg, examines the EU’s accounts to ensure that EU funds are collected, managed, and spent in a manner that is legal and financially sound. The Court of Auditors consists of one member appointed from each EU member nation. Members serve six-year terms.
History
Beginnings.
After World War II ended in 1945, Jean Monnet, a French statesman, promoted the idea of gradually uniting the democratic European nations both economically and politically (see Monnet, Jean). As a result, in 1951, Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany signed the Treaty of Paris, which established the European Coal and Steel Community (ECSC). The ECSC united its six member nations in a single common market for the production and trade of coal, steel, iron ore, and scrap metal. It abolished all trade barriers among the members for these products. It allowed coal and steel workers from any member nation to work anywhere in the ECSC countries. The ECSC began operating in 1952.
Formation of the European Community.
The success of the ECSC led its six members to sign the Treaties of Rome in 1957. These agreements broadened the countries’ cooperation by establishing the European Atomic Energy Community (Euratom) and the European Economic Community (EEC). Through Euratom, the nations pooled resources to develop nuclear energy for electric power production and other peaceful uses. The EEC worked to combine the members’ economic resources. Euratom and the EEC began operating in 1958. They shared the ECSC’s judicial and legislative bodies but had separate executive agencies. In 1967, the three organizations merged their executive agencies. The ECSC, Euratom, and the EEC together became known as the European Community (EC).
Increasing cooperation.
By mid-1968, the EC members had eliminated all tariffs affecting trade among themselves and established a common tariff on goods from other countries. As a result, the volume of trade among member countries rose quickly. The elimination of tariffs on trade within the EC allowed member countries to increase their economic efficiency and substantially raise their citizens’ standard of living.
In the early 1970’s, the EC began managing the exchange rates of the currencies of some of its members, notably West Germany and France. EC efforts to stabilize exchange rates were strengthened in 1979 when its members formed the European Monetary System (EMS). The EMS required that the value of member countries’ currencies not move above or below set limits in relation to each other (see European Monetary System).
Over the years, the European Community admitted six new members. Denmark, Ireland, and the United Kingdom were admitted in 1973. Greece joined the EC in 1981, and Portugal and Spain became members of the organization in 1986.
Beginning in 1989, many Communist countries in Eastern Europe moved away from Communist rule. They held democratic elections and reduced government control of their economies. The EC then established special agreements with these countries on trade, economic aid, and political relations. In 1990, West Germany and East Germany united. The new, united Germany replaced West Germany as an EC member.
In 1987, the EC completed ratification of the Single European Act. This act called for ending all customs controls and most other obstacles to the free movement of goods, services, workers, and capital among EC members. It took effect on Jan. 1, 1993.
Formation of the European Union.
In 1992, representatives of the 12 EC members signed the Treaty on European Union in Maastricht, the Netherlands. This pact, also known as the Maastricht Treaty, took effect in November 1993. It provided for creation of the European Union (EU), which took the place of the EC. In 1995, Austria, Finland, and Sweden joined the EU as full members.
The Maastricht Treaty also called for establishing the European Central Bank and for adopting a single currency—the euro. The central bank began operations in 1998.
Recent developments.
In 2002 and 2003, a convention of delegates from across Europe drafted a constitution for the EU. The document was designed, in part, to define the balance of power between the central EU government and the member countries. In 2004, European leaders approved the constitution. To go into effect, the document needed to be ratified by the voters or legislature of every member nation. Many countries did approve the constitution, but French and Dutch voters rejected it in referendums in 2005.
Also in 2004, 10 more countries joined the EU. The new members were Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. In 2007, Bulgaria and Romania joined the organization.
While the European Union has proven itself highly effective on a variety of levels, there are sharp differences in the economic well-being of the member nations and differing approaches to law within them. On Dec. 1, 2009, the Treaty of Lisbon amending the existing EU and EC treaties went into effect. The treaty improved EU cooperation on defense, security, and external policy. It also strengthened the role of the European Parliament and gave full legal force to the Charter of Fundamental Rights for EU citizens.
In 2012, the EU, while struggling to overcome a number of economic and social difficulties, was awarded the Nobel Peace Prize. The Nobel committee cited the EU’s efforts to promote “peace and reconciliation, democracy and human rights in Europe.” Croatia became a member of the EU in 2013.
In 2015, a series of refugee and migrant boat disasters in the Mediterranean Sea led the EU to strengthen its external border patrols and rescue operations. Efforts to stop illegal human trafficking were also increased. Large numbers of refugees and migrants in southeastern Europe created an additional crisis, leading some nations to temporarily restore border controls. Throughout the 2010’s and into the 2020’s, EU leaders continued to deal with challenges surrounding foreign affairs, immigration, security, and trade.
In June 2016, British voters chose to leave the European Union in a contentious referendum nicknamed “Brexit” (British exit). The EU soon began modifying numerous security and trade policies affected by the Brexit process. The United Kingdom remained in the EU until the formal withdrawal process was completed on Jan. 31, 2020. Earlier that month, both the UK and EU parliaments approved a Brexit withdrawal agreement. The agreement established an 11-month transition period—ending Dec. 31, 2020—during which Britain remained in the EU single market and British citizens retained the ability to live and work in other EU countries. The two sides reached a trade and cooperation agreement days before the deadline. The British Parliament approved the agreement soon afterward, and EU lawmakers approved the deal in April 2021.
