Consider, also, prosperity. In fact, Western European economies experienced their most rapid expansion a decade before the first intra-European barriers to trade started to come down.
That is not to say that intra-European trade liberalization was not beneficial. It was, beginning in the s. The official EU narrative tends to omit all of the above inconvenient facts. That is not to deny the strong desire for peace and prosperity among European peoples and their leadership after World War II. Rather, it will be argued that the EU institutions were, for the most part, ineffectual, and have increasingly become liabilities. As the example of Switzerland shows, there is no a priori reason to think that a looser cooperation between European states is incompatible with peace and prosperity.
The Treaty of Rome, signed in , took economic integration a step further. In return for partial liberalization of the movement of goods, services, people, and capital, the EEC members agreed to a French demand for central planning in agriculture, known as the Common Agricultural Policy CAP.
While the two were partially coterminous, the former did not cause the latter. Research shows that the post-war boom in Western Europe was a result of reconstruction and internal economic reforms.
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The two were happening at the same time. Still, even a generous interpretation of the role of the EEC on growth in Western Europe after must accept that, by that time the EEC was established, Western Europe was already well on its way to prosperity. As an example, take West Germany. The West German post-war recovery started in , when Ludwig Erhard reformed the currency and removed the Nazi price and wage controls, which had been kept in place by the victorious allies. The EEC came into effect in and intra-European tariffs on trade were not fully eliminated until —two decades after the beginning of the West German miracle.
Whatever the salutary effects of the EEC actually were, they did not last. It did not, contrary to popular opinion, upend protectionist policies among European nations and bring about higher growth. The Single European Act of turned out to be a double-edged sword. The European Commission successfully broke down many internal barriers to trade. As a consequence, trade in goods is now largely free. The EU has also liberalized the movement of capital, and the Schengen Agreement, which was incorporated into the EU law by the Amsterdam Treaty of , greatly liberalized the movement of people.
When it comes to services, however, protectionism continues to reign. In the early s, Frits Bolkestein, who was the EU Commissioner for the Internal Market, proposed the so-called Bolkestein directive, which would have greatly liberalized trade in services in the EU. His initiative failed. The European institutions also used their new powers to overregulate economic activity.
Hundreds of thousands of directives and regulations—dealing with everything from the labor market to the electric power consumption of toasters—poured and keep pouring out of Brussels.
The European Union: A Critical Assessment
From a humble free-trade area and a customs union among six Western European countries, the EU has grown into a supranational entity that governs many aspects of the daily lives of million people spread across 28 European countries. While lacking sovereign power, the EU has its own flag, anthem, currency, president five of them, actually , and a diplomatic service. Today, the EU is trying to grasp new powers, while, paradoxically, it is also facing mounting opposition and a growing probability of collapse.
How did the EU get here? There is an overwhelming consensus among economists that free trade stimulates economic growth. Unfortunately, trade liberalization in Western Europe was a slow and uneven process. The actual benefits of intra-European trade liberalization are difficult to estimate, because intra-European trade liberalization was taking place alongside global trade liberalization.
Over time, intra-EU trade relative to trade with the rest of the world has grown less, not more, important to European prosperity. The costs of communications, financial transfers, and transportation have been greatly reduced since World War II, making global trade increasingly lucrative. Trade between the United States and the EU, for example, continues to grow, even though there is no free-trade agreement between the two. Moreover, the economic benefits of intra-European trade have been undermined by overregulation. As centralization of decisionmaking in Brussels increased, Western European growth has declined see Figure 1.
Today, much of Europe is not growing at all. Yet Europe has also suffered from a number of self-inflicted wounds that go beyond overregulation. The CAP, for example, has resulted in mountains of butter and lakes of milk. Those were later destroyed or dumped in Third World markets, where they undermined local producers.
The euro was supposed to have led to increased growth, lower unemployment, and greater competitiveness and prosperity.
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In retrospect, it should be clear that the Eurozone was poorly designed. Its members have committed themselves to maintaining manageable levels of debt capped at a maximum of 60 percent of GDP and deficits capped at a maximum of 3 percent per year. What the Eurozone lacked was a credible enforcement mechanism. Indeed, some of the biggest Eurozone members, including France and Germany, broke their debt and deficit commitments shortly after the launch of the common currency.
Other countries followed suit. The markets lent money to Southern Europe, expecting that if problems arose they would be bailed out. The markets were correct. He believed that integration, driven by national governments, was often based on the domestic political and economic issues of the day. The theory rejects the concept of the spill-over effect that Neo-functionalism proposes.
He also rejects the idea that supranational organisations are on an equal level in terms of political influence as national governments. This debate is intended to look at the core points of each theory, where they differ and which is the more convincing argument?
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The fate of the nation-state and the case of Western Europe. Spill-over is the following concept — in order to enjoy the full benefits of integration of the first sector you need to integrate the related sectors.
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There are three types of spill-over — functional spill-over, political spill-over and cultivated spill-over. Firstly, functional spill-over, which regards spill-over in an economic context. For example, this might involve integrating coal and steel, then integrating transport systems so that coal and steel are moved around more easily. Secondly, there is Political spill-over, where political actors shift their allegiance to a new centre, for example from the national parliament to Brussels.
The counter theory to spill-over is the logic of diversity. Neo-functionalism is flawed as it assumes that integration in low politics economic will lead to integration in areas of high politics. This is not possible as issues of high politics are integral to the national interest; so integration will only be possible when national interests coincide, which is possible but unlikely. Neo-functionalism believes areas of high politics can be cultivated into integration, whereas intergovernmentalism believes that the fate of the nation-state should never be subject to the decisions of others.
Neo-functionalism proposed building a community Europe, through the concept of spillover the theory proposes economic determinism. Spill-over will eventually lead to a completely integrated Europe with a strong central government.
This has not yet been proved true, as EU integration has become a long and difficult process. This is understandable since it is not exactly easy to integrate together all those policies, economies and people.
However this would most probably be the eventual result, which is already visible: The experience of the European Union EU is widely perceived as not just an example, but the model for regional integration. In recent years, the EU has also been pursuing an increasing number of trade agreements which may in turn lead to spillover. Neo-functionalism believes in building a community Europe, but then the question is raised, what is the purpose of this new entity?
There is no common outlook and getting the major powers of Europe to agree what this should be will be near impossible. Intergovernmentalists would also argue that economic determinism regarding integration is wrong. It will always be politics that drive integration, while the motive may be economic — to solve a crisis or even just to profit — the key decisions by all actors will be political.
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Neo-functionalism is an example of a liberal theory of regional integration. Its focus is on human welfare needs, not political conflict and law. As such there has been much more progress on economic integration than there has on creating a common foreign and security policy. It also accepts the independent role of international organisations and that the transformation of the international regional system towards a better order is feasible so making the European Union a project worth investing effort in.
Intergovernmentalism assumes states to be the core actors, this is difficult to deny as most economic boundaries and policies are administered by the nation state. It believes that the logic of diversity will prevail in areas of high politics e. Neo-functionalism is an accessible theory which provides a good starting point for analysis. National currencies…must have remained within the normal 15 per cent bands of the EMS for the previous two years. Unless put into perspective, such economic details defeat the purpose of this essay. Therefore, baring in mind the Liberal Intergovernmentalist theory and in particular its assumption that states act rationally in achieving their goals, we will take a brief look at the stances of Germany, France and the United Kingdom on this matter.
Kohl strongly acknowledged the popular demand and the economic benefits of the EMU. France and Germany saw the mutual economic and political benefits of the EMU and therefore represented a powerful partnership in advancing the greater European cause. The United Kingdom however, had a far more eurosceptical approach. Margaret Thatcher opposed these developments, despite a good deal of popular demand within the UK and her own conservative party. The UK maintained, through Thatcher, its historically prudent and even isolationist approach towards European affairs.
Based on our theory mentioned above, the overall conclusion here is clear: states behave rationally in achieving their goals, but at the same time such goals are determined by domestic pressures and interaction. Hence, governments play a key role in determining inter-state relations and common agreements on economic and political developments. The British isolationist approach contributed to the creation of the pillar system within the EU, whereby instead of renaming the European Economic Community as the European Union, the treaty had to establish a legally separate European Union comprising the renamed European Economic Community and the inter-governmental policy areas of foreign policy, military, criminal justice and judicial cooperation.
The first pillar was the European Communities, while the second and third pillars were related to foreign policy and military matters the CFSP pillar and criminal justice and cooperation in home affairs the JHA pillar. To an assessment of the significance of these pillars we will turn next, but not before having a concluding remark at this stage. Hence, the EMU, one may conclude, made the Maastricht Treaty significant in the fact that it created an entirely new interstate economy, opened up new opportunities for economic development and therefore represented a major step forward for the European integration process.
Moreover, it created the premises for the introduction of the singular currency with all its benefits. The most important significance of the TEU is that it created the foundation of modern day European Union. Despite its legislative complexity, we will take a broad overview of the main composing parts. The TEU, as mentioned above, was divided into three main pillars. The first pillar is known as the European Communities pillar the EMU was also included in this pillar.
Briefly, this pillar was primarily concerned with giving EU institutions more legitimacy and to some extent more power. However, the European Parliament is widely regarded as a victorious institution within this particular pillar, while the Commission and the European Court of Justice seem to have lost some of their prerogatives. The reason for this is that the Treaty. In fact, this ended up in giving more powers to EU institutions over the national parliaments of member states. Yet another significant aspect of the first pillar is the introduction of the notion of EU citizenship.
All the above certainly attributed more significance to the Treaty, particularly seen within the context of EU enlargement and with the need for integrating the poorer, former communist economies. If the first pillar primarily deals with the domestic structural character of the EU and its member states, the second pillar deals with the need for a more unified voice of the EU in external affairs and security matters. Liberal Intergovernmentalism tells us that states behave rationally in achieving their goals — a complete common foreign and security policy was not amongst them.
Perhaps one reason behind such weak result was that historically different states had different foreign goals and were therefore, not willing to refute them over night just in the name of achieving a common European goal, which was not even in the broadest forms defined. The third and last pillar is known as Justice and Home Affairs the Schengen agreement was a major catalyser in these developments. It dealt with just about anything that could be associated with the title. From issues such as immigration, political asylum, control of external borders and customs cooperation to police cooperation in combating drugs and fraud, and judicial cooperation in criminal and civil matters — all were debated in the third pillar Dinan.