EU Economic History Lecture Notes 2024/2025 PDF

EU Economics and Slovenia 2024/2025 Lecture 6 Nov 14th 2024 EU economic history, part I Sonja W Šlander - Events leading to European integration processes - The EU development milestones WW II (1939 – 1945) Economic (GDP) set-back and WW II death toll in se...

EU Economics and Slovenia 2024/2025 Lecture 6 Nov 14th 2024 EU economic history, part I Sonja W Šlander - Events leading to European integration processes - The EU development milestones WW II (1939 – 1945) Economic (GDP) set-back and WW II death toll in selected Western European countries Pre WW II situation globally was one of protectionist economic measures (high tariffs and other barriers to trade) + currency devaluations to stimulate export and therefore economic growth → Bretton Woods Conference (1944): IMF, IBRD→WB, ITO/GATT (1947)→ WTO (1995) →→UN System (1945),  Can there be peace in Europe after WW II? ▪ Jean Monnet: called „The father of Europe“, in 1943: "There will be no peace in Europe if the States are reconstituted on the basis of national sovereignty, with all that that entails in terms of prestige politics and economic protectionism. The countries of Europe are too small to guarantee their peoples the prosperity that modern conditions make possible and consequently necessary. Prosperity for the States of Europe and the social developments that must go with it will only be possible if they form a federation or a "European entity" that makes them into a common economic unit.” ▪ W. Churchill, British PM (1940-1945 and 1951-1955) in his speech in 1946, Zὒrich: ▪ "Therefore I say to you: Let Europe Arise!" ▪ Advocating for Franco-German partnership and kind of United States of Europe EU founding fathers The Schuman Declaration was presented by French foreign minister Robert Schuman on 9 May 1950. Since 1985, Europe Day has been celebrated on 9 May every year.  1946-1949: Divisions and reconstructions of Europe (Cold war) ▪ Western Europe - Military integration: WE (1948)→NATO (1949), 12 W European countries + USA and Canada)) - Protection of democracy and human rights: European Council (1949) ▪ Eastern Block: Soviet Union and the socialist countries of Eastern Europe - Economic integration: CMEA (Council for Mutual Economic Assistance), 1949-1991 - Collective defense treaty: Warsaw pact (Soviet Union + E European countries), 1955-1991 Economic recovery in W Europe: Establishement of OEEC (Organisation for European Econonic Cooperation - Paris, april 1948): coordination of distribution of funds for ERP - Evropean Recovery Program (Marshall Plan, 1948-dec. 1951, recovery of W Europe) 1960 Division of Europe after WW II Berlin divided by the „Berlin wall“ (1961- 1989) - Mikhail Gorbachev  European integration in the 1950s The beginnings of the EU May 9 1950 Robert Schuman: The Schuman Declaration It proposed the creation of a European Coal and Steel Community, whose members would pool coal and steel production … as a basis for peaceful Jean Monnet cooperation of European countries (1988-1979) "make war not only unthinkable but materially impossible“ The ECSC (1951) became the first of a series of supranational European institutions that would ultimately become today's "European Union". The author of the idea was Jean Monnet. Robert Schuman (1886-1963)  3 communities 1. 1951: Treaty establishing European Coal and Steel Community (ECSC) ▪ Signed in Paris, 1951 ▪ 6 founding MS: France, West Germany, Italy, Belgium, the Netherlands, Luxembourg ▪ Common market for coal and steel, High Authority Building on success of the Treaty of ECSC, the six member countries expanded their cooperation to other economic sectors. 2. March 25 1957: Treaty of Rome: 2.A Treaty establishing the European Economic Community (EEC) 2.B Treaty establishing the European Atomic Energy Eommunity (Euratom) ▪ Entry into force: 1. January 1958. ▪ 6 MS: France, West Germany, Italy, Belgium, the Netherlands, Luxembourg  (2a) Treaty establishing the European Economic Community (EEC) (1957/1958) ▪ Establishes (with set conditions and timelines) Customs union (CU) with elimination of tariffs, quotas and custom duties btw its signatories, and establishing a common external tariff on imports from third countries. Common market, based on free movement of goods, people, services, capital Article 2: “It shall be the aim of the Community, by establishing a Common Market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increased stability, an accelerated raising of the standard of living and closer relations between its Member States..” ▪ established certain policies from the start as joint policies among the member countries (e.g. CAP, common trade policy), consensus of MS European integration in the 1960s United Kingdom: interested in free trade with no joint policies  Stockholm 1960, establishment of EFTA (Evropean Free Trade Association), Free trade area (no common external tariff, no common trade policy) 7 founding countries: Austria, Denmark, Norway, Portugal, Sweden, Switzerland, UK. ▪ Western Europe was divided between the Six and the Seven. ▪ Limited possibilities for political influence, hence: 1961 UK applies for EEC negotiations and membership (along with Ireland, Denmark, Norway) ▪ De Gaulle: "a number of aspects of Britain's economy, from working practices to agriculture" had "made Britain incompatible with Europe" and that Britain harboured a "deep-seated hostility" to any pan-European project ▪ Due to increased economic interest (trade, investment) on both sides, in 1969, the UK made a third and successful application for membership  3. 1965/1967, Treaty of Brussels (The Merger Treaty) ▪ Unifies executive institutions of ECSC, EEC and EURATOM: Council of ministers of European Communities Commission of European Communities ▪ The 3 communities are now known together as European Communities (EC), although they are legally still independent ▪ This treaty is regarded by some as the real beginning of the modern European Union. 1968 – European Community becomes a customs union Elimination of tarrifs and quotas between EC member states, introduction of common customs tariff in trade with third countries de Gaulle-Hallstein conflict in the negotiations on the financial regulation of the agricultural policy ▪ 1965 France: “empty chair policy”  French gov‘t announced France’s intention not to take its seat in the Council of Ministers until it had its way (six months) ▪ The Luxembourg compromise: - where a country believed that its vital national interests might be adversely affected, negotiations had to continue until a universally acceptable compromise was reached. Should no such compromise be reached, France demanded compliance with the unanimity rule (i.e. giving the State in the minority a right of veto) - Increasingly unmanageble as the number of MS increased … partially corrected in 1986 European integration in the 1970s Further institutional reforms 1974: European Council was established ▪ members: Presidents or prime ministers of EC member states ▪ Officially the highest EC institution 1979: First direct European Parliament elections were held, allowing citizens to elect 410 MPs to the European Parliament, and also the first international election in history. - specified already in the Treaty of Rome in 1957, the Council of Ministers was responsible for setting it up but it has procrastenated 1972/1973 – Free trade agreement btw EFTA and EC 1975: LOME convention with 46 ACP countries (African, Caribbean and Pacific), - It provided for most ACP agricultural and mineral exports to enter the EEC free of duty 1980: SFRY and EC sign a Cooperation Agreement (ratified in 1983). Yugoslavia was the first socialist state to develop relations with the EC. European Communities‘ enlargements: 1. 1973: United Kingdom, Republic of Ireland, Denmark 2. 1981: Greece 3. 1986: Spain and Portugal European integration in 1985-1993: towards the internal market 1985: European Commission: The White paper on the completion of internal market, 300 legislative proposals, including measures to eliminate a series of physical, technical and fiscal non-tariff barriers. 4. 1986/87: Single European Act (SEA) was signed: - First major revision of the 1957 Treaty of Rome - Changes in the decision-making process - Setting the deadline for the single EU market by Dec 31,1992  The Single European Act (1986/87) ▪ European Community has an objective of establishing a single EU market by 31 December 1992 ▪ the Act also made Council of Ministers‘ decision-making more effective : − qualified majority voting (QMV) (removing the requirement for unanimity) in some areas related to the adoption of internal market, (except for fiscal matters, social protection and movement of people) − 55% of member states‘ votes in favor (15 out of 27) + the proposal is supported by member states representing at least 65% of the total EU population − Principle of subsidiarity is introduced; the role of European Community is limited to areas where a common decision-making is necessary  The Single European Act (1986/87) ▪ European Council (1974) now formally included in the EEC institutional structure ▪ Areas of common interest also external policy, social and economic cohesion among MS and their regions ▪ By 1992 about 90% of the issues had been resolved and the single market was launched on 1 January 1993 with the four freedoms: Free movement of goods (customs union,1968) Free movement of services Free movement of capital Free movement of labour The beginning of relations with Eastern European coutries ▪ 1988 : Joint EEC/Comecon (CMEA) Declaration of mutual recognition ▪ 1988: Trade and economic cooperation agreement btw EC and Hungary (later Poland, Chechoslovakia, 1993: Slovenia) ▪ 1989: The fall of the „iron curtain“ … most of the governments of the Eastern Bloc were overthrown in a (mostly) peaceful wave of revolution recognition of the new situation: a reformed Eastern Europe could provide EC with huge new markets and peaceful relations (also, military savings and fear of economic refugees) Aid program to Poland and Hungary (Phare) was agreed, later extended to all other Central and Eastern European (CEE) countries European Bank for Reconstruction and Development (EBRD) was established in 1990 to provide loans to CEE countries 1990: German reunification: DDR (Western part) becomes part of BRD (Eastern part) to form reunited Germany --- an asymmetric economic shock in EC 1992: Recognition of Slovenia as an independent country by EU member states. 1991-1993 Setting up the stage for the economic and monetary union 1991 at the Maastricht summit of the European Council, the Heads of State or Government agree on the draft Treaty on European Union and declare that „Economic and monetary union in particular, is now well and truly launched in a gradual but irreversible process“. 1992 The Treaty on the Functioning of EU (Maastricht Treaty) concluded between the then twelve member states of the European Communities , is the foundation treaty of the EU ▪ Comes into effect in 1993. ▪ establishes the European Union (EU) on the foundation of the three, already partially merged, European Communities. EU still not an independent legal entity. ▪ 3 pillars of EU: Pillar 1: the 3 Communities (ECSC, EEC=now European Community, Euratom) Pillar 2: Common Foreign and Security policy Pillar 3: Justice and Home Affairs  The Treaty on EU (The Maastricht Treaty (1992/93) announced "a new stage in the process of European integration„: ▪ Set in motion Economic and Monetary Union (EMU), ultimately leading to a single currency; ▪ EU citizenship established the right of EU citizens to vote and to run for office in local and EP elections in their country of residence, regardless of national citizenship.; ▪ Broader authority for EC, including formal control of community policies on development, education, public health and consumer protection, environmental protection, social and economic cohesion, and technological research ▪ Common Foreign and Security Policy with the prospect of a common defence policy; ▪ Enhanced cooperation in the field of justice and home affairs; ▪ Enhance the "democratic functioning" of the institutions (EP gets the right to co-decision, office of the European ombutsman is created; Committee of regions, …). ▪ Convergence criteria specified the conditions under which a member would qualify for participation in the common currency.  EU historical milestones (part I) EU Treaties Milestones of EU economic integration 1951/52 – 2003: The Treaty of Paris (Establishing European Coal and Steel Community) 1957/58 – Treaties of Rome (Treaty establishing the 1968 - Customs Union European Economic Community (EEC), Treaty establishing the European Atomic Energy Community (Euratom) 1965/67 The Merger Treaty 1.1.1993 – EU Single 1986/87: The Single European Act Market 1992/93: The Treaty on the European Union (Maastricht Treaty) 1997/1999: The Treaty of Amsterdam 1.1.1999 - EMU 2001/2003: The Treaty of Nice 2007/2009: The Treaty of Lisbon