The European Union and the World Economy CHAPTER FOUR

1. The European Union and the World EconomyCHAPTER FOUR The EU is the most important economic bloc in the world, thus its relationships with the rest of the world are important

2. The Common Commercial Policy (CCP) • The CCP is operated by the Commission and governs trading relationships between the EU and the rest of the world • Its powers involve approving tariffs and quotas between member states and the rest of the world. The negotiation of trade liberalisation with third world countries and the World Trade Organisation (WTO)

3. Free Trade The CCP vows to safeguard the EU from unfair trading practises The EU is involved in four main areas that have given it significant influence in the area of world trade • EU-US transatlantic agenda • EU-Japan framework • Asia-Europe Meeting (ASEM) • The WTO and the IMF

4. EU-US transatlantic agenda (NTA) • The NTA was established to promote peace, stability and democracy and to encourage economic relations and expansion of world trade • The Transatlantic Business Dialogue (TBDC) component of the NTA enabled an agreement to be reached to develop a system of mutual recognition of testing and certification procedures for EU-US trade • If agreement could be met this would have an enormous influence in determining world standards and rules

5. EU-Japan framework • EU- Japan framework covers political dialogue, economic and trade matters and global challenges, yet is not as advanced as the EU-US system • The framework allowed the Commission to make a number of suggestions to the Japanese government on the deregulation of the Japanese economy

6. Asia-Europe Meeting (ASEM) • ASEM which includes all newly industrialised Asian countries (NICs), China and Japan is outlined in the chapter and is introduced as a practical system of resolving problems connected to EU-Asian trade

7. The WTO and the IMF • All issues connected to trade liberalisation in goods, services and capital and dealing with trade dispute procedures of the WTO are dealt with by the EU

8. The EU and the rest of Europe • The EU will soon have established a free trade for industrial goods that encompasses all of Western, most of Central and Eastern Europe • Iceland, Norway, Liechtenstein and Switzerland are not currently members of the EU, but they are nearly fully integrated into most of the economic aspects of the Union • The prospect of the increased growth of members in the EU presents a tremendous challenge to the EU and will have significant implications for business operations in Europe

9. The Institutional Challenge of Enlargement • The admission to the EU of countries with less developed political and economic systems is likely to cause problems • No solutions have been found but relationships between national governments and the EU need to be improved if it is to be an effective government of the single economic space

10. The Economic and Political Challenges of Enlargement • The economic challenge of the enlargement is that the level of the development of the applicant countries is considerably less than the average of the current member states • The enlargement will also include members with different legal, economic, social and cultural systems which is likely to lead in a delay to the creation of an effective single economic space

11. The EU and the Triad • The relationship between the US, Japan and Europe, which is commonly referred to as the Triad, has a significant impact on the world economy

12. The Impact of European Monetary Union The establishment of the European Monetary Union will effect • Financing international business activities • New international monetary system

13. Implications for Business • The three main areas where the relationship between the EU and the rest of the world influences businesses: • The creation and development of rules of trade worldwide • The emergence of a single European economic space • The impact of the euro on extra-Euroland trade and investment