European Union: An Economic Power

HISTORY

After the end of World War II, the European nations were divided, nationalisms were on the rise, and Europe was still recovering from the devastating economic and psychological impact of six years of atrocities and bloodshed. In that context, European Integration was considered by many leaders of the period as a solution to all problems. In that spirit, in 1957, the Leaders of France, Italy, Belgium, Netherlands, Luxemburg, and West Germany, signed the Treaty of Rome, which established a common market among these countries and is considered as a precursor of the European Union (the EU) as we know it today (eur-lex.europa.eu, n.d.).

The Signing of the Treaty of Rome, Source: epthinktank.eu

The European structure kept evolving. New Institutions were created, and more members shared the vision of a common European future. What started, in 1957, as a mere economic union of six European states has now evolved to the most successful Union of independent States in global history. Today, the EU counts 27 members who collaborate closely in various political areas, according to the European “laws, treaties, regulations or directives agreed on by the EU institutions, including judgments handed down by the European Court of Justice” (acquis communautaire) (Rudolf, Berg 2010).

EU AS A GLOBAL POWER

Many researchers through the years have tried to define the EU based on its action as an international actor. “Civilian”, “soft”, “normative” power are some of the terms used in that purpose. Despite some inherent differences, most theories converge that the EU is first and foremost an “economic” power. With close to 448 million people, the EU represents 13.52% of the world economy (tradingeconomics.com, n.d.). Compared to China, which represents 17.39% of the world economy, but with a total population of approximately 1.45 billion people, the EU’s significance in the world economy and trade is apparent (worldometer.info, n.d.).

The most common way for the EU to set its economic relations with a third country is through an official partnership. The status quo of each partnership is different, but the most common ones are:

• The Customs Union Agreements, which establish a joint customs tariff for imports from third countries and eliminate customs duties in trade inter-partes,

• The Agreements for Association, Stabilization, Free Trade or Economic Partnership, which reduce custom tariffs in bilateral trade,

• The Partnership and Cooperation Agreements, whose purpose is to provide a general framework for the partners’ economic cooperation, and,

• Other Agreements adapted to different situations.

Source: europa.eu

The EU has economic ties with most of the world’s formal States. Almost every country in the world aims to establish a fixed economic relationship with the Union. That is the reason why the most frequent reaction of the EU vis-à-vis an infringement of international law is to suspend any economic agreement with the State responsible or to impose other general economic sanctions. This way of coping with crises is not always effective. Especially in the case of military conflicts, the EU often seems incapable of acting with determination and effectiveness. This one-sided means of reaction to international challenges is one of the main arguments of the EU’s critics and one of its biggest challenges to grow and play a more significant role as an international actor.

EU’S TRADE CHARACTERISTICS

During the last decade, the EU’s trade balance leaves a surplus. For 2020, this surplus is approximately 218 billion Euros (statista.com, n.d.). The top five exported HS6 digit level products from the EU in 2019 were medicaments, petroleum oils, automobiles, human and animal blood, and aircraft parts. On the other hand, the EU mainly imported petroleum oils from bituminous minerals, transmission apparatus, other petroleum oils, gold in semi-manufactured forms, and medicaments (worldbank.org, n.d.). This data reveals the EU’s extensive need for energy sources, especially petroleum and natural gas.

According to the World Bank, the most significant percentage of EU exports is the USA (21.7% of all exports). China, Switzerland, Russia, and Turkey follow and complete the EU’s top 5 export destinations. However, the EU imported 20.4% of its overall imported goods from China and only 14.22% from the USA. The following three countries which complete the list are Russia, Switzerland, and Turkey, from which the EU imported 7%, 6.4%, and 3.9% of the overall imports, respectively.

CONCLUSION

The Treaty of Rome, in 1957, laid the ground for a strictly economic collaboration among six European countries. Since then, the European edifice has evolved. More States have joined, and the EU has developed a set of rules that affects almost every domain of policy. However, in the international sphere, the EU primarily remains an economic power. It has close trading relations with all the other global powers and is a desired partner for most countries worldwide. In addition, the EU often uses its economic impact to impose its will on its economic partners, although this tactic is not always effective.

References:

Current World Population. (n.d.). Worldometers.info. https://www.worldometers.info/world-population/

EU Trade Agreements 2022. (2022). [Pdf]. Europa.eu. https://trade.ec.europa.eu/doclib/docs/2020/december/tradoc_159174.pdf

European Union GDP. (n.d.). Tradingeconomics.com. Retrieved February 24, 2022, from https://tradingeconomics.com/european-union/gdp

European Union Trade. (n.d.). Wits.worldbank.com. https://wits.worldbank.org/CountrySnapshot/en/EUN/textview

European Union: trade balance from 2010 to 2020. (n.d.). Statista.com. https://www.statista.com/statistics/253593/import-of-goods-from-the-eu/

European Union: trade balance from 2010 to 2020. (n.d.). Statista.com. https://www.statista.com/statistics/253593/import-of-goods-from-the-eu/

Rudolf, U. J., & Berg, W. (2010). Historical Dictionary of Malta. The Scarecrow Press Inc. https://books.google.gr/books?id=nwuUOVkaMB0C&pg=PA22&redir_esc=y#v=onepage&q&f=false

Image Sources:

The Rome Treaties: towards an ‘Ever Closer Union.’ (2017). Epthinktank.eu.

https://epthinktank.eu/2017/05/09/the-rome-treaties-towards-an-ever-closer-union/

Treaty of Rome (EEC). (n.d.). Europa.eu. Retrieved February 24, 2022, from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Axy0023