From Europe to the Euro

1. EUROPEAN UNION Delegation of the European Commission From Europe to the Euro Amy Medearis Senior Economist, Economic and Financial Affairs Section Delegation of the European Commission to the United States Euro Challenge 2009 Faculty Orientation New York, NY November 25, 2008

2. From Europe to the Euro • - Brief History • The Single Market • Enlargement • The Euro • - EU versus Euro Area • - Why Care?

3. A Brief History of the EU:Deepening and WideningPolitical goals, Economic steps

4. A Brief History of the European Union • The original goal behind the integration of Europe was to prevent the devastating wars of the first half of the twentieth century from ever happening again… • Dresden, Germany, 1945.

5. A Brief History of the European Union 1950 2007 March 1957 Rome Treaties European Economic Community (EEC) European Atomic Energy Community (EURATOM)

6. A Brief History of the European Union 2007 1950 1973 United Kingdom, Ireland and Demark

7. A Brief History of the European Union 2007 1950 1981 Greece

8. A Brief History of the European Union 2007 1950 1986 Spain and Portugal Same year: the “Single European Act” was signed, revising the Treaty of Rome and re-launching European Integration and the completion of the internal market

9. A Brief History of the European Union 2007 1950 1989 Fall of the Berlin Wall “Hidden enlargement” E. Germany

10. A Brief History of the European Union 2007 1950 1992 “Deadline” for completing the single market (Dec. 31, 1992)

11. A Brief History of the European Union 2007 1950 1993 Maastricht Treaty 2 1 3 TREATIES Treaty of European Union established 3 pillars of cooperation: Economic (EMU), Political, Judicial

12. A Brief History of the European Union 2007 1950 1995 Austria, Finland and Sweden

13. A Brief History of the European Union 2007 1950 1999 EURO launched

14. A Brief History of the European Union 2007 1950 May 1, 2004 Cyprus The Czech Republic Estonia Hungary Latvia Lithuania Malta Poland The Slovak Republic Slovenia Jan. 1, 2007 Romania Bulgaria 1999 EURO launched

15. Decision-Making in the EU Council of the EU European Commission European Parliament

16. The goals of EU enlargement • To spread stability, peace, democracy, freedom • To make the EU stronger than the sum of its parts • To strengthen and sustain the European social model/s • To realize the potential of significant economic opportunities in the form of a larger market

17. Economic Benefits and Challenges of Enlargement 2004 GDP per capita in PPS, EU25=100 It is estimated that the enlargement of 2004 will have added 1.0%-1.8% per year to the GDP of the 10 new Member States (1994-2009), and a cumulative 0.5-0.7% to GDP of the EU-15.

18. 27 EU Member States (FYI) • Austria, Belgium, Bulgaria, • Cyprus, Czech Republic, • Denmark, Estonia, Finland, • France, Germany, Greece, • Hungary, Ireland, Italy, • Latvia, Lithuania, • Luxembourg, Malta, • Netherlands, Poland, • Portugal, Romania, • Slovakia, Slovenia, Spain, • Sweden, United Kingdom

19. The Single Market • Based on Four Freedoms: • Free movement of goods; • Free movement of capital; • Free movement of persons; • Free movement of services. • Impact: GDP boosted by nearly €900 billion over 10-year period 1992-2002 (over $1 trillion) and 2.5 million jobs created from the single market alone.

20. The Single Market • More than a free trade area: • Free trade area: no tariffs on traded goods inside FTA • Customs Union (1968): FTA + common external tariff • Single (or Internal) Market (1992): breakdown of all tariff and non-tariff barriers to trade and business Benefits of the Single Market: increased prosperity; more jobs; easier travel; more opportunities to live, work and study in other EU countries; wider choice of products and services; lower prices; less red tape; huge potential market (economies of scale); easier to do business.

21. The Euro One market, one money? • The Euro has boosted economic integration within the Euro Area (trade, foreign direct investment, and financial services)

24. The euro area (13) versus EU (27) Euro area:Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Slovakia*, Slovenia, Spain EU Member States obliged to adopt the euro eventually:Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Sweden EU Member States with an “opt out” from adopting the euro:Denmark, UK * Slovakia will adopt the euro 1/1/09

25. Why teach about the EU? The European economy? The Euro? • Europe is a major player • in the global economy • 2. It is the most important trade and investment partner for the United States • 3. Common challenges (e.g., related to globalization and ageing)

26. EU-US Economic Relations • The European Union's 27 members • represent just 7% of the world's population, • but they account for more than one-fifth of • world trade. • Transatlantic flows of trade and investment amount to around $1 billion a day • jointly, US and EU global trade accounts for almost 40% of world trade the largest bilateral trade partnership in the world! • Together, EU and US make up nearly 40% of global output (GDP) and are drivers of global economic policy.

27. Common Interests and Problems • EU & US have common values in democratic government, human rights and market economics, and they are bound by addressing global challenges (i.e. security/terrorism & sustainable development) • Common economic issues, such as financial reform; ageing populations; need for budgetary savings; global competitiveness; immigration

28. FOR MORE INFO . . . For additional resources to prepare for the Euro Challenge: www.euro-challenge.org For more information on the European Union in the US, please visit: www.eurunion.org To access EUROPA, the EU’s official web portal, please visit: http://ec.europa.eu/