МИНИСТЕРСТВО ОБРАЗОВАНИЯ И НАУКИ РОССИЙСКОЙФЕДЕРАЦИИ
УХТИНСКИЙ ГОСУДАРСТВЕННЫЙ ТЕХНИЧСКИЙУНИВЕРСИТЕТ
Кафедра «Информационные системы в бизнесе»
Курсовая работа по дисциплине
«Микроэкономика»
натему: The European Union.
Работу выполнил
студент группы ЭТК(IMS)-04
Замкова В.О.
Работу проверил
Старший преподаватель
Берловская Е.В.
Ухта, 2005.
Содержание
TOC o «1-3» h z u 1.1 An Outline of the EU's Developmen. PAGEREF _Toc105185353 h 3
1.2 The EU's Decision-making Process. PAGEREF _Toc105185354 h 3
1.3 The Budget and Finance. PAGEREF _Toc105185355 h 7
1.4 The Common Agricultural Policy. PAGEREF _Toc105185356 h 10
1.5 The Common Fisheries Policy. PAGEREF _Toc105185357 h 10
1.6 Regional Policies. PAGEREF _Toc105185358 h 12
1.7 Social Policy. PAGEREF _Toc105185359 h 14
1.8 Environmental Policy. PAGEREF _Toc105185360 h 15
1.9 Transport Policy. PAGEREF _Toc105185361 h 18
1.10 R&D Policy. PAGEREF _Toc105185362 h 19
1.1 An Outline of the EU's Development
The modern origins of theEU stem from the events and aftermath of the two world wars, particularly thesecond, and from the bitter effects of the interwar recession and the 'beggarmy neighbour' policies adopted by most countries.
1951six countries, Belgium, The Netherlands, Luxembourg (Benelux), France,Italy and West Germany, signed the European Coal and Steel Community Treaty andformed the ECSC which still exists and whose treaty has to be redrawn by 2002.
1957the same six signed the Treaties of Rome to create (1) The EuropeanEconomic Community (EEC) and (2) Euratom. The treaties came into operation inJanuary 1958. Since then the European Community and its derivative The EuropeanUnion have consisted of the three bodies, 1. ECSC, 2. EEC (called the EuropeanCommunity since 1987) and 3. Euratom.
1972Denmark, Ireland and the United Kingdom acceded with effect from 1January 1973 (The Nine').
1979Greece acceded with effect from January 1981 (The Ten').
1985 Portugal and Spain acceded witheffect from January 1986 (The
Twelve').
1990the newly unified Germany was incorporated as a single state into theCommunityon 3 October.
1994Austria, Finland and Sweden acceded with effect from 1 January 1995 (TheFifteen').Other important landmarks are:
1986The Single European Act (SEA) was signed in February and came into forcein July 1987. It established the Single European Market from 1 January 1993.
1991TheEuropean Economic Area (EEA) was formed by an agreement
signed in October. Itjoined the EC to EFTA (minus Switzerland) and came into force on 1 January1994. Liechtenstein joined late in 1995.
1991The Maastricht Treaty on European Union was agreed in December and signed inFebruary 1992. Afterratification delays it came into force 1 November 1993.
1996An Intergovernmental Conference proposed reforms to the MaastrichtTreaty. It led to the Treaty of Amsterdam, June 1997.1.2 The EU's Decision-making Process
The European Union hasfive main institutions: the Commission, the Council, the European Parliament,the European Court of Justice, and the
European Court ofAuditors. Figure 19.1 shows a simplified outline of decision making andinstitutional relationships in the EU.The relationships in the diagram haveevolved over time and will change again as the Maastricht Treaty is revised andas new members join. At the moment, decisions are made by the Council, sometimesin conjunction with the European Parliament. The word Council covers severalformats for meetings. It can be the heads of government and/or state meetingtwice (or more) a year in what is called The European Council'. Or it can bethe ministers for a particular subject such as agriculture or transport,meeting as The Council of Ministers' or it can be 'Council working groups' whoare officials from the member states. The term also includes the Committee ofPermanent Representatives (COREPER) whose members are senior diplomats andcivil servants. They meet weekly and aim to smooth the passage of decisions sothat only the final or most contentious issues are decided by their politicalmasters.
Some decisions require the Council and the Commission to consult theEconomic and Social Committee or the Committee of the Regions which have anadvisory role.
Generally speaking theEuropean Parliament's role is also advisory because it is not a law-making bodyin the way that other parliaments are, but there are two procedures called theco-operation procedure and the codecision procedure that give the EuropeanParliament more say and authority.
In practice, theCommission, which is the executive or civil service of the Union, is the mostimportant of the institutions if only because of the continuity of itsexistence and the sheer quality of its permanent staff. It currently has 20Commissioners, two from France, Germany, Italy, Spain and the United Kingdomand one from each of the other states. It has about 15 000 staff and is dividedinto Directorates General (DG). The Commissioners, who are now appointed forfive years, are obliged to be completely independent of their nationalgovernment. The Commission is the main source of initiatives in the EU and therole of President of the Commission is extremely important, as Jacques Delorsshowed during his period of office to 1994. He was responsible for the SingleEuropean Act and for the Treaty on European Union and for the initiatives onEuropean Monetary Union which will lead to a single currency (probably).
When decisions are madethey are formulated in different ways. Put simply they are:regulationswhich are directly applied and no national measures are
needed to implement them; directiveswhich bind member states on the objectives to be achieved but
leave it to the individual government to achieve them through modifying
their own laws; decisionswhich are binding, in all their aspects, on those they are
addressed to, whether individuals, firms or member states; recommendations and opinionswhich are not binding.
Member states vary significantly in the speed and effectiveness withwhich they implement directives and this difference is a major cause ofdissension between members. The process of making European Union laws is long drawn out and full ofopportunities for consultation, representation and protest, so there is no realexcuse for national governments to talk as if they are being overridden by'Brussels' which is a short-hand term for the Commission. The United KingdomGovernment has developed a reputation for being over-pernickety orover-enthusiastic in interpreting the application of directives and foradopting an excessively bureaucratic approach to changing UK law to comply withthem.
A high proportion ofEuropean Union legislation requires unanimous agreement in Council but theSingle European Act introduced a method of qualified majority voting which wasextended by the Maastricht Treaty. There are proposals to extend this majorityvoting system further but the UK Government of Mr Major strongly opposed theidea. The numbers are modified with each accession of new members but, in 1997,were as follows:
№, of votes
Germany, France, Italy, UK
10
Spain
8
Belgium, Greece, Netherlands, Portugal
5
Austria, Sweden
4
Ireland, Denmark, Finland
3
Luxemburg
2
Total
87
When a Commissionproposal is being considered, at least 62 votes must be in favour. In othercases, the Qualified Majority Vote (QMV) is also 62 but at least 10 states mustvote in favour. In 1994 only about 14 per cent of the legislation adopted inthe Council was passed by QMV. Whether the proposed legislation is subject to aQMV or not depends on the relevant Act or treaty under which it is discussedand which 'pillar' of the European Union it appears under. Items under thefirst pillar may or may not be subject to the QMV depending on whether they aredesignated for that under the Single European Act or the Treaty on Union. Itemsunder the second pillar, that is Common Foreign and Security Policy (CFSP) andunder the third pillar, that is Justice and Home Affairs (JHA) are not becausethey rely on what is called 'intergovernmental cooperation'. See Figure 19.2.for the so-called pillar structure of the EU since the Maastricht Treaty.
When EU laws are passedthe Commission puts on its hat as 'Guardian of the Treaties' and makes surethat the laws are implemented according to the original intentions. It may takecountries or organisations to the European Court of Justice (ECJ) in order toget a legal determination of an issue. The ECJ is an institution with a growingrole and importance and is beginning to have a significant impact on nationallaws through its interpretations. United Kingdom 'Eurosceptics' want its powerscurtailed or even abolished because some of its decisions on social legislationand fishing have upset the UK government. The political argument about the ECJdisguises the more important discussion of the relationship between nationallaws and EU law. So far the ECJ has established the principle, as did the USASupreme Court in the relationship of Federal and State laws, that national lawsmust be subordinate to EU law. Incidentally, you should not confuse, as doesthe UK media from time to time, the European Court of Justice with the EuropeanCourt of Human Rights whose decisions also annoy Little Englanders.
Subsidiarity
There are several interpretationsof this term but, essentially, it means that action should be taken in the EUat the most appropriate level, whether it be at community or national or evenregional level. The concept is increasingly applied to European Union decisionmaking. The United Kingdom tends to interpret and advocate it as a way ofrestraining the growth of the Union's federalist tendency but the idea doeswork both ways. There are, for example, many occasions when joint action by allmembers is desirable and more effective.1.3 The Budget and Finance
The annual budget of theEU (technically of the European Community) is fixed by the Council of Ministersand the European Parliament by a process called 'the shuttle' which begins inJune when a preliminary draft budget is published. From this preliminary effortthe Council draws up a proper draft budget in July which goes to the Parliamentfor its first reading in October. It returns to the Council which gives it itsown second and final reading in November. When the Council has finished with itthe budget goes again to the Parliament for its second reading and finaladoption, usually in mid-December.
Some of the expenditureallowed for in the budget is designated as compulsory expenditure which isdefined as such on the basis of whether it results from the European CommunityTreaty and from acts adopted in accordance with it. The Council has the finalsay on this type of spending, most of which is agricultural or about half thebudget. The Parliament has the final say on most of the remaining expenditure.There is usually some wrangling between the Parliament and the Council overamendments proposed by the Parliament which almost always wants to raisespending.
The annual budget is setup within a framework called The Financial Perspective which is a planincorporating the four years ahead with ceilings laid down for expenditure onthe six main categories within the budget. The 1995 budget, for example,included agriculture, structural actions, internal policies, external action,administrative expenditure and reserves. The commitments will lead to actualpayments in the future.
Sources of revenue for the Union
The Community has foursources of revenue which together are called 'own resources'. The history ofhow the EU came eventually to have these own resources is long and tortuous.The four, with 1995 figures, are:Agricultural and sugar levies, £1546 million in 1995, are placed on
imports of agricultural products from non-members. They raise the price
of imports from world price levels to the level of the threshold prices fixed
for Community agricultural products. Customs duties, £10 187 million in 1995, are received from trade with
non-members. Contributions based on VAT, £30 973 million in 1995. The calculation
of this is complex but each member pays over an amount which is
calculated by applying a notional rate of VAT to an identical 'basket' of
goods and services in each member state. The amount payable is subject to
a restriction or cap based on the size of the member's Gross National
Product. Gross national product (GNP) based contributions, £17 121 in 1995, which are calculated by taking the same proportion of each member's GNP. This source, which is also called the 'Fourth Resource', is used to make up the difference between the EU's expenditure and the revenue expected from the first three sources, and is subject to an overall own resources ceiling.
The total for 1995 forthese four sources of revenue was £59827 million. The present system offinances was agreed in 1988, 1992 and 1994. Under these there are maximumcontributions or own resources ceilings established until 1999:
% of
Community GNP
1993
1994
1995
1996
1997
1998
1999
1,2
1,2
1,21
1,22
1,24
1,26
1,27
The United Kingdom has an 'abatement' on its VAT payments in order toreduce its overall net contribution to the EU budget. Mrs Thatcher spent several yearsasking for 'our money back' and was partially successful. The abatement isroughly two-thirds of the difference between what the United Kingdom contributesto the EU budget and what it receives from the budget. The repayment is made ayear in arrears. The UK's net contribution for 1995 was estimated at £3.1billion.
The expenditure of theEuropean Union
The expenditure side ofthe budget is divided into six main categories. The proposed expenditurecommitments for 1995 are given with each item:Agricultural guarantee, £29 851 million, which is the largest single
group and covers the price and market guarantees under the CAP. Great
efforts have been made to keep this section under control and to reduce it. Structural operations, £20 723 million some of which relates to
agricultural restructuring but most applies to regional policy. They are
divided into: Agricultural guidance £2956 million Regional Development Fund £8338 million Social Fund £5072 million Cohesion Fund £1694 million Other structural operations £2664 million
This is the next largest area of spending.Internal policies, £3980 million, which are a collection of policies such as
that for the environment:
Other agricultural operations £164 million Other regionaloperations £40 million Social and educational policies £575 millionEnergy and environment policies £172 million Industry and internal market£574 million Research and development £2337 million Other internal£118 millionExternal policies, £3842 million, which cover overseas aid:
· Food aid £667 million
· Aid to Eastern Europe and formerSoviet Union £1246 million
· Other development aid £1462million
· Other external £468 millionAdministration, £3155 million, which is a small percentage of the EU
budget in relation to the scale of operations:
· Commission £2039 million
· Parliament £664 million
· Council £242 million
· Court of Justice £91 million
· Court of Auditors £42 million
· Committees, Economic and Social, ofthe Regions £79 millionReserves and payments, £2120
· Monetary reserve £394 million
· Emergency reserve £254 million
· Loan guarantee reserve £254million
· Repayments £1218 million
The total proposedcommitments expenditure for 1995 was £63 670 million which shows a steadyincrease over previous years: £46000 million in 1992, £54000million in 1993, £56000 million in 1994.
Figure 1.3 shows how the pattern of EU expenditure has altered in recentyears and indicates the degree of success in reducing the dominance ofagricultural spending and shifting money to regional and social policy.
The winners and losers
Some countries are net contributors to and some are net beneficiariesfrom the European Union budget. The largest net contributor over the years has been Germanyfollowed by France, Italy, the Netherlands and the United Kingdom. TheNetherlands usually contributes most per head of population. Most of the netcontributors see their payments as necessary to raise the overall standard ofliving in the Union and to create better regional cohesion through the regionaland social funds. The United Kingdom has taken a different line and has alwaysprotested about being a net contributor. The abatement negotiated by MrsThatcher leaves the UK still contributing about £2.5 billion a year netto the Union. Table 19.1 shows contributions/receipts.
Fig. 1.3.Developments in community spending.
Source:European Community Finances, HM Treasury, Cm. 2824, London, HMSO, 1995.
Table1.1Contributions to, and receipts from, the European Community budget,*1993 (£ billion)
Contributions
Receipts**
Germany***
14,9
5,6
France
9
8,2
Italy
8
6,8
United Kingdom
5,9
3,5
Spain
4
6,5
Netherlands
3,1
2,1
Belgium
1,9
1,9
Denmark
0,9
1,2
Greece
0,8
4
Portugal
0,7
2,6
Ireland
0,5
2,3
Luxembourg
0,2
0,3
* From the Court ofAuditors Report, 1993
** Excludes £4.9 billion which is mainlydevelopment aid and administrative expenditure for the other institutions. Thereceipts are Community payments to both private and public sectors in memberstates
*** As constituted since3 October 1990
Source: Social Trends 95, London, HMSO, 1995.1.4 The Common Agricultural Policy
The details of the CAP are given in Chapter 16 so this section isconcerned with the place that it has within the economy of the European Union. The CAP was the first of the commonpolicies and by far the most important because it absorbed so much of therevenues of the original EEC and later the Union. It also had a profound effecton the political development of the Union and on the relationships between themembers, especially when new states acceded. The CAP has also influenced theforeign relations of the Union particularly with developing countries and withthe USA where it has been a persistent source of grievance. The policy has, inaddition, had a significant impact on the redistribution of income betweenmember states and within the various regions of the Union. There have beenlarge transfers of income to the areas of marginal farming and importantadditions to the prosperity of rural areas. Overall the CAP has added to theprice of food for the consumer if EU prices are compared with world marketprices and the assumption is made that the food could have been bought abroad.If it had been, of course, there would have been high rural unemployment as aconsequence and a higher tax burden to pay for that. It is probably better topay higher prices for food and directly keep farmers and farm workers in jobs.In the longer term the CAP will be an integral part of the European Union'senvironmental policy and may change radically as agricultural products are usedfor fuel and when (if?) world demand for agricultural products exceeds supply. 1.5 The Common Fisheries Policy
The CFP is one of the mostcontroversial policies of the Union and is one that is never likely reconcilethe national desires for maximum catches and strong fishing fleets with thedesperate need to conserve fish stocks. Every time a new member joins theEuropean Union there has to be a renegotiation of the CFP and the allocation ofcatches and quotas because, outside the narrowly defined coastal territorialwaters, the fish stocks are regarded as a joint resource. The accession ofSpain, the second largest fishing country in the EU after Denmark, has causedparticular anxiety in the UK because Spanish ships were allocated a quota ofsome species in the Irish Box which impinged on traditional UK waters. Spanishships were also registered in the United Kingdom in order to take some of theUK quotas and some UK owners sold their quotas to the Spanish. An attempt bythe British Government to legislate against the practice was declared illegalby the European Court of Justice. One of the reasons that Norway's referendumshave rejected membership of the European Union is the fear of the impact ontheir fishing industry.
Although the fishingindustry employs only 260 000 fishermen in the EU, that is about 0.2 per centof the working population, it has a much larger impact indirectly by employingfour or five times as many on boat building, processing, distribution and soon. It also has a disproportionate importance in less developed regions wherethere is little alternative employment. Fishing is a term that can be extendedto include fish farming, and the collection of shell fish and molluscs.
As territorial waters, oreconomic zones, have been extended to 200 nautical miles from coasts, the EUfishing fleet has been excluded, except by Treaty and the allocation of quotasfor catches, from the old fishing areas off eastern Canada (now almost fishedout), Iceland and Norway. The deep-sea fleets now travel further to the warmerwaters of the Atlantic, the Indian Ocean and to Africa where agreements havebeen negotiated with the countries concerned. At the same time there isincreasing competition from the former Soviet Union countries and Japan for thedwindling supplies.
The conservation offishing stocks has led to very controversial decisions, some of which seem tohave counterproductive results. The EU has agreed that members should reducetheir fleets of certain types of boats by paying the owners to destroy them.The United Kingdom has been rather slow to pursue this policy. At the same timethe EU has also had a policy of financing the building of more modern,technologically advanced boats which can stay at sea longer and catch fish moreeffectively. The attempt to conserve stocks has led to different boats beingallocated quotas for specific types of fish. The consequence is that if a boatreaches the quota and then catches more of that species they have to throw theexcess back, dead, into the sea. There is a strong temptation to cheat and keepthe fish and smuggle it ashore. Another effort to reduce catches is to increasethe mesh size of nets and regularly inspect fishing gear and fine defaulters.The most hated method, however, is to limit the number of days in a month thata boat can fish, a regulation that creates all sorts of anomalies andinjustices, given the problems of the weather that beset fishing. The finalpolicy is to suspend altogether fishing of certain fish, for example ashappened with herring in the North Sea. Governments seem to respondexceptionally slowly to the dire warnings of the conservationists in respectof fish stocks and seem to listen more to their fishing lobbies. Fishermen tendto adapt to shortages of one type of fish by switching to catching other typesand by doing so they aggravate the problems. The long-term solution may liewith fish farming but even that is throwing up political problems as Norway isaccused of dumping farmed salmon and trout on the European market.Paradoxically there is sometimes a glut of fish, mainly caused by theactivities of non-EU boats such as those from Russia, and some fish prices havecollapsed at the quay side but not in the shops. An example was in 1995 whensuch an occurrence resulted in French fishermen staging destructivedemonstrations and the EU responded by introducing minimum prices for somespecies.
It is hard to see how theintractable problems of the CFP can be resolved except, perhaps, by a savagereduction in fishing fleets, draconian imposition of quotas or restrictions ontime at sea or a repatriation of fishing policy to each member state and areturn to national fishing controls, which is what many nationalists advocate.If this latter policy were adopted it would be a serious breach of the singlemarket concept.1.6 Regional Policies
The regional policy ofthe European Union is closely bound up with other policy areas such asagricultural, social, transport and environmental but the main methods ofimplementing regional changes are contained in the structural funds. There arefour of these and their purpose is to reduce regional disparities and increaseeconomic and social cohesion. The four funds are:The European Regional Development Fund (ERDF); The European Social Fund (ESF); The Guidance Section of the European Agricultural Guarantee and
Guidance Fund (EAGGF); The Financial Instrument for Fisheries Guidance (FIFG).
The ESF was set up by the Treaty of Rome and began to operate in 1961has been reformed several times, the latest reform being introduced in 19 whenit was modified together with the ERDF and the EAGGF. The FIFG was introduced in 1993 tohelp struggling fishing communities. These funds have been given six objectivesin the post-1994 framework:Helping less developed regions that are lagging behind in the sense that they have a GDP per head of less than 75 per cent of the Union average or where there are special reasons for including them in this objective. The regions eligible for aid under this objective are the whole of Ireland, Portugal and Greece, the south and west of Spain, the Mezzogiorno of Italy, the overseas territories of France, one region of Belgium (Hainaut), the Flevoland region of the Netherlands, all the East German Lander, and in the UK, Merseyside, Northern Ireland and the Highlands and Islands. Three funds supply money, the ERDF, ESF and the EAGGF. The economic conversion of declining industrial areas where the
unemployment rate and the rate of industrial employment are higher than
average and the rate of industrial employment is falling. The ERDF and
the ESF provide money for this objective. Reducing long-term unemployment and facilitating the integration into
work of young people and those socially excluded from the labour market,
The ESF applies here. Facilitating the adaptation of workers to industrial changes and to changes
in production systems through preventative measures against unemploy
ment. The ESF applies here. (a) Promoting rural development and helping to adjust production, processing and market structures in fishing, agricultural and forestry as part of the CAP reform process. The EAGGF and FIFG apply here, (b) Assisting development and economic diversification in vulnerable rural areas affected by structural decline. Three criteria apply here and two must be satisfied to receive aid. They are a high share of agricultural employment, a low level of agricultural income and a low population density and/or a significant trend towards depopulation. The EAGGF, ESF and ERDF all apply here. Helping regions with a population density of less than 8 inhabitants per square kilometre and meeting certain criteria on GDP. The Arctic and subarctic areas of Sweden and Finland will benefit.
Strictly speaking the regional objectives are 1, 2, 5(b) and 6 while theothers cover the whole Union.
There has been a majorshift of European Union money from agricultural guarantees towards regionalpolicy and the Social Fund since 1985. In the current five-year plan, 1994 to1999, about 142 billion ECU at 1992 prices will be spent on the structuralfunds. About 70 per cent of this will go on Objective 1. By 1999 about 36 percent of expenditure commitments will be on structural funds. Over the yearssince the accession of Greece, Spain and Portugal there have been specialIntegrated Mediterranean Programmes to spend extra money in those countries andin southern Italy.
When the MaastrichtTreaty on European Union was agreed it included provision for additional fundsto be channelled to four members in order to bring them more in line with theother members so that they would be readier for the introduction of a singlecurrency or would suffer less if they did not immediately join. This provisionis called the Cohesion Fund. The fund is aimed at thefour countries mentioned above and they will receive, between 1993 and 1999,ECU 15.1 billion or ECU 16.223 billion in adjusted prices. The aim is to shiftresources from the 'rich' north to the 'poorer' south and to remove theexcessive economic and social differences between those areas. Each countrymust have an approved plan to meet the monetary union criteria and will receivethese funds only after the projects, costing above ECU 10 million, are vettedby the European Investment bank. The money will only be given for environmentand transport projects or for the trans-European Networks schemes. Spain willreceive between 52 and 58 per cent of the total, Portugal 16 to 20, Ireland 7to 10 and Greece 16 to 20 per cent.
The principles behind the allocation of structural funds
In 1989 a set of fourprinciples was established to determine what action should be taken through thestructural funds. They were modified in 1993 to produce the following:Action must concentrate on the six objectives. There must be partnership and close cooperation between the Commission
and the local, regional and national bodies concerned. The principle of additionality must apply, that is the member state must
not reduce its own spending but should use the structural funds to supple
ment it. There should be proper programming through partnership over a specified
number of years.
The United Kingdom hassometimes come into conflict with the Commission because it has not alwaysobserved the third principle of additionality and has tried to substitute Unionfunds for United Kingdom money. There are a large number of programmes appliedby the European Union itself and about 9 per cent of the structural funds arespent on those. They have names that are often acronyms such as ADAPT, RECHAR,KONVER and RESIDER that all deal with adjustment to industrial change. Theseprogrammes are occasionally upgraded and modified and may be renamed. Theremaining 90 per cent of the money goes on national programmes agreed with theCommission and local and regional authorities. In the United Kingdom we shallsee the impact of such programmes on Merseyside over the next five years sinceit now qualifies under Objective 1 for very large sums of money.
The regional policieshave been the subject of intense study over the years and of much criticism. Itis hard to isolate the effects of the regional policy from the concurrent macroeconomicclimate. The conclusions are usually that the creation of new jobs costs a hugesum per job (akin to the £1 million per job of the UK Eurofighterprogramme announced in September 1996) or that the firms who relocate wouldhave been forced by market pressures to relocate anyway. The bureaucracy of thesystem is also accused of absorbing too high a percentage of the funds andthere are frequent allegations of corruption. There is nodoubt, however, that many remote rural areas and declining industrial regionshave benefited from the regional funds.1.7 Social Policy
The European Union'ssocial policy stems from the original Coal and Steel Community and the need tocreate jobs to replace those being phased out by technological change and theconsequent plant and pit closures. Part of the approach was to promotegeographical and vocational mobility. The ESCS pursued these policies to findnew work for large numbers of unemployed coal miners. The ESF followed similarlines after 1961 and its role has expanded since into areas such as equal payfor equal work and health and safety at work. Progress was very slow in the1980s because decisions in Council had to be unanimous unless the proposalcould be 'smuggled' through under the Single Market rules of health and safetyat work. The United Kingdom was usually the only member to vote against sociallegislation and in 1989 refused to sign the Social Charter or, to give it itsproper title, The Charter of Fundamental Rights of Workers. As a result the othermembers incorporated a new Social Chapter into the Maastricht Treaty on Unionand the UK opted out of it. In practice the other members, now 14, took theSocial Chapter into a protocol of the Treaty and ran it using qualifiedmajority voting without the UK having the right to participate in the voting.They removed this anomaly when the Amsterdam Treaty was agreed in June 1997 andthe new UK Government signed the Social Chapter. Some social policy mattersrequire unanimity because they still come under the Treaty of Rome and latertreaties. The areas covered by social policy include:Free movement of workers; Social security for migrant workers; Promotion of workers' geographical and occupational mobility; Equal pay for men and women; Safety at work; Health protection in the nuclear industry; Working hours and holidays; Vocational retraining; Handicapped persons, elderly persons; Youth unemployment; Full and better employment - co-ordinating national policies; Redeployment of workers in declining industries; Leisure of workers, housing; Accident prevention and health protection; Integration of migrant workers; Help for the neediest - homeless, old, vagrants, one-parent families; Industrial democracy, workers' participation; Rights of working women.
The United Kingdom Government up to May 1997 had trouble accepting theelements concerning industrial democracy and workers' participation andresolutely opposed the Works Councils that have been accepted by the othermembers under the Social Chapter protocol. In practice many large British multinational companies thatoperate in other member states introduced Works Councils despite the objectionsof the Government. The UK also opposed the Social Charter and Chapter on thegrounds that it would commit the UK to introducing a national minimum wage, butthere is nothing specifically in the Chapter on this subject so it wassomething of a bogeyman. The Labour Government elected in May 1997 committeditself to signing the Social Chapter and to introducing some sort of nationalminimum wage. There has been a very confused and not very illuminating debateabout the potential effects of a minimum wage and other social legislation. TheConservative Party argues that the general effect of the Social Chapter is toraise the costs of employing people and thus it contributes to reducing theinternational competitiveness of the European economy and 'destroys jobs'.Their opponents say that that is not the case and that a minimum wage atcertain levels would not raise unemployment and that workers' morale andproductivity would rise.
One area in which theEuropean social policies have had a considerable impact on members' economiesis in establishing the rights of women to equal pay and conditions and much ofthe progress in the UK is attributable to rulings of the European Court. TheCourt has also had a great impact on the rights of part-time workers and onpensions. In all of these changes the UK has been, to say the least, reluctantand often very obstructive until the Court ruling has been made. The accessionof Sweden and Finland has shifted the balance of the Union further towardssocial intervention and the raising of standards of social provision. InSeptember 1996 a conflict developed between the UK and the EU over the WorkingHours Directive which limits the working week to 48 hours and its extension tohitherto excluded occupations such as hospital medical staff and transportworkers.1.8 Environmental Policy
The European Union hasover the years evolved a reasonably coherent policy on the environment throughthe medium of action plans. The Maastricht Treaty on Union raised environmentalaction to the status of a policy and replaced unanimity by the QMV in Councilon most environmental affairs. The latest action plan, the fifth, is calledTowards Sustainability and runs from 1992 to 2000. The previous plans weresubjected to regular reviews and one such review in 1988 had a big impactbecause it led to an increased emphasis on energy efficiency through programmessuch as Thermie which provides money for spreading technological information onenergy efficiency, renewable energy sources, clean coal technologies, and oiland gas prospecting and development. The programme is now in its second phase,1995 to 1998. In December 1991, 45 nations signed the European Energy Charterwhich aims at exploiting Eastern European energy sources more efficiently afterEU nations have installed modern, environmentally cleaner power stations andequipment. A new version of this was signed in 1994 and there are now 48nations involved including the USA, Japan, Canada and Australia. One importantaim is to modernise the energy industries of the former Soviet bloc, many ofwhose plants were appallingly harmful to the environment. Part of this policyincludes shutting down the remaining reactors at Chernobyl which were stillbeing used in late 1996.
The early Communitypolicies began as early as 1972 and were intensified after the Single EuropeanAct of 1986 which established legal requirements in the environmental sphere.By 1993 over 200 directives had been approved on improving air and waterquality, controlling waste disposal and monitoring industrial risk. Many of themeasures were aimed at the protection of nature, that is flora and fauna. Ingeneral the approach to improving quality was based on prevention via thesetting of standards and the prosecution of defaulters. This approach underwenta major change after 1992 when the Towards Sustainability action programme wasadopted. This now concentrates on prevention and on the control and managementof growth. The new action plan incorporates environmental considerations intothe basic agricultural, social, regional, transport and economic policies. Inmany instances, for example the building of new major roads, an environmentalimpact study has to be made. Another example of the application of the policyis the Cohesion Fund mentioned above under Regional Policy, which incorporatesthe environmental dimension into part of the allocation of funds. The newprogramme is in accordance with the 'Earth Summit' held in Rio de Janeiro in
1992, that is the UN Conferenceon the Environment and Development which adopted the Agenda 21 aimed atachieving international co-operation in the twenty-first century.
In 1989 the Commission issued detailed proposals for the setting up of aEuropean Environmental Agency (EEA)and it came into being in late 1993. Itis based in Copenhagen and the hope is that it will become an interna tionalagency and not just a European one. Its job is to provide reliable data, objectivityand the information needed to monitor the application of European laws on theenvironment. The EEA is the culmination of a programme called CORINE thatlasted from 1985 to 1990 which collected information on an experimental basis.In pursuit of the aim of making sure the public is properly informed onenvironmental matters, the EEA is setting up a European Information andObservation Network. To begin with it will concentrate on air quality and atmosphericemissions, water quality, resources and pollutants, the state of the soil,flora, fauna, and use and natural resources, waste manage ment, noiseemissions, chemical substances harmful to the environment and coastalprotection. The Commission says it will 'give special consideration to transfrontier,pluri-national and global phenomena and the socio-economic dimension'.
There has been along-running debate in the European Union on the question of how to 'make thepolluter pay'. Several ingenious schemes have been suggested but all relyeventually on the state creating a very effective inspection, supervision andmonitoring service whose cost, if it worked properly, would fall on thetaxpayer rather than the polluter because polluters would stop their badpractices and cease paying 'fines'. Another solution to some environmentalproblems associated with excessive or inefficient use of fossil fuels is the'carbon tax'. This proposed tax has been at the heart of the Commission'sattempts to reduce carbon dioxide emissions and it began as a serious andpotentially effective measure. It turned out to be much too bold for theaverage politician, however, and the final measure is a much watered down one.The United Kingdom led the opposition to the detail of the scheme although itaccepted the principle. The plan required the other major users of carbonfuels, the USA and Japan, to follow suit and would have put $10 on a barrel ofoil in AD 2000 after an initial $3 in 1993. Other taxes would have been cut tocompensate for the rise in the price of industrial coal of about 60 per cent,of petrol by 6 per cent, of domestic heating oil by 17 per cent and electricityby 14 per cent. The final decision, made in December 1994, was a feeblecompromise. The Environment Council decided that the Commission should draw upa framework for members to apply a carbon tax in their own country if theywished. Sweden, which already had a version of such a tax, has been leftlooking very lonely because the other members are frightened to follow suit incase they anger their motoring lobby. They seem to believe that the publicwould not understand that other taxes would fall to compensate for the rise incarbon fuel taxes.
One of the main purposesof the proposed tax was to help the European Union meet its self-imposedtargets for maintaining carbon dioxide emissions at 1990 levels in the year2000. (The UK set itself the year 2005 as a target date.) Only Germany andBelgium are anywhere near reaching their targets and the Commission hasrecommended more efforts to curb vehicle emissions and improve energyefficiency. There is great opposition to these suggestions from vestedinterests on the grounds that costs of production will increase. The poorermember states who cannot afford the energy price rises or the technologicalimprovements necessary to achieve the suggested improvements in efficiencyalso object.
In December 1995 the Commission adopted what it calls a 'landmark' WhitePaper entitled 'An Energy Policy for the European Union'. The pape follows onfrom a Green Paper issued for consultation in January 1995. The White Papersays that the future energy policy will be based on three pillars, overall competitiveness, security of energysupply and environmental protection. It says that the policy will beimplemented mainly by means of integration of the market, management of theexternal dependency, promotion of sustainable development and support of energyresearch and technology. There will be a programme for the Commission to followaccompanied by a two-yearly updating process. A basic assumption of the policyis that European energy use will increase. The integration of the market willtake place on the foundation of a liberalised internal market for gas andelectricity backed by 'an efficient monitoring tool in order to analyse andunderstand market developments and to ensure that structural and technicalchanges are not in conflict with energy policy goals'. In other words therewill be a regulated market because monitoring on its own would be ineffective.As far as possible the intention is to make policy decisions neutral in theireffect on the energy market and investment.
Another main thrust ofthe policy is to 'internalise external costs as far as possible'. This meansthat producers and presumably users of energy will, in the medium term, besubjected to fiscal tax measures that make them bear the external costs of thepollution and other environmental disbenefits that they create. Theenvironmental aspect would also be approached through the promotion ofrenewable energy sources and support for energy efficient technologies. All ofthese aims will be the subject of a five-year Work Programme so we can expect astream of Commission initiatives.
In September 1996Eurostat published a report on the rising demand for energy and land in thecontext of 'sustainable mobility'. It revealed that transport now consumes moreenergy than industry in the European Union and that road transport isresponsible for over 80 per cent of the transport consumption. The price offuel in relation to disposable income has fallen significantly between 1980 and1994. In 1994 the proportion of disposable EU income per head needed to buy1000 litres of a weighted mixture of fuel was 4.9 per cent compared with 7.7per cent in 1980. Needless to say, consumption has increased. The other gloomyfact is that emissions of carbon dioxide and particulates are continuing torise despite the tougher controls on exhausts and higher fuel standards.Moreover, emissions of sulphur dioxide continue to rise in almost all memberstates. The report also says that the fall in lead emissions has been causedmainly by regulation rather than by the price differential in favour oflead-free petrol. It casts doubt on the benefits of the price differential infavour of diesel fuel which has stimulated the rise in demand for dieselvehicles because of the growth in output of particulates and oxides of sulphurthat has resulted.1.9 Transport Policy
Strictly speaking, thereis not yet, in late 1996, a European Union transport policy. There is anattempt to achieve one and there are many EU aids to transport investment anddevelopment but the full policy will probably take until AD 2000 to emerge. In1992 the Commission published a White Paper The Future Development of theCommon Transport Policy'. The Maastricht Treaty marks the beginning of a CommonTransport Policy (CTP) because it set the goal of further development of thesingle market together with sustainable growth which respected the environmentand improved safety and quality in the infrastructure of the Union. The Treatyincorporated decisions for the finance of trans-European Networks or TENS asthey came to be called, the first 14 programmes of which have already begun.
The White Paper wasfollowed by a debate and the Commission then published its CTP Action programmefor the years 1995-2000 which will contain a number of initiatives. The threeobjectives of the programme are:improving the quality of transport systems in terms of competitiveness,
safety and environmental impact; improving the functioning of the tret market to promote efficiency and choice; <