General policies of the European Union

Agriculture On 30 June 1960, the European Commission tabled proposals for the creation of a common agricultural policy CAP. CAP is built upon the three pivotal principles market unity, Community preference, and financial solidarity. What are the objectives of the CAP i. to increase productivity, ii. to ensure a fair standard of living for the agricultural Community, iii. to stabilize markets, iv. to assure food supplies, v. to provide consumers with food

at reasonable prices, It recognises the need to take account of the social structure of agriculture and of the structural and natural disparities between the various agricultural regions and to effect the appropriate adjustments by degrees. Economic and monetary policy The economies of the EUs Member States are becoming extraordinarily intertwined thanks to the single market. More than 60 of their trade is with each other, their companies are linked by a myriad of joint

ventures, common ownerships and cooperation agreements, their banks, insurance companies and accountancy firms can operate freely across national borders and ordinary citizens can open bank accounts in any Member State and move capital around the Union as they wish. But the full benefits of economic integration - faster economic growth, better job creation and wider choice for consumers - are still not being delivered to citizens as well as they should be.

Part of the reason is the existence of 15 different currencies. Despite the success of the European Monetary System in promoting currency stability since 1979, events in 1992 and 1993 demonstrated that currencies are always vulnerable to sudden and disruptive movements. Instability discourages investment partly because currency markets tend to overshoot and fix values either higher or lower than is justified by real economic circumstances.

Europes many currencies tend to increase the costs of travel and tourism and are a financial burden to companies which operate in more than one Member State. Nor is it easy to make a comparison between prices in these countries which means that the consumer is not greatly encouraged to buy in the cheapest market. These are some of the reasons why the Union is aiming for economic and monetary union

EMU by 1999. The original Rome Treaty had very little to say about money because stable currencies were largely taken for granted, thanks to the Bretton Woods system which had erected the US dollar as the dominant monetary standard. During the Communitys first 35 years, coordination was more virtual than real the Commission analysed the economic situation and produced its policy recommendations, but each

Member State was entirely free to determine its own priorities. Now, they are steering their economies towards common objectives, partly because that is the best way to prepare for EMU and partly because they know that financial markets punish countries whose policies are not particularly sound. Currencies are driven downwards and interest rates upwards - penalties which can damage prospects for lasting economic growth and job creation.

Economic policies coordination Financial integration Laws and procedures Economic policies coordination The Treaty now requires Member States to regard their economic policies as a matter of common concern and to coordinate them within the Council of Ministers. The policy framework is established at the highest political level of the

Union - the Heads of State or Government meeting as the European Council. In order to qualify for membership of EMU, the Treaty requires Member States to aim for certain targets for their budget deficits, public debt, inflation, and interest rates and exchange rates. Since inflation, interest and exchange rates are crucially influenced by the size of budget deficits,

special surveillance procedures are applied by the Council and the Commission. Under the excessive deficit procedure, as it is known, the focus is on a countrys total outstanding public debt as a percentage of its gross domestic product GDP and on its budget deficit as a percentage of GDP. The targets laid down in a protocol to the Treaty are 60 of

GDP for outstanding debt and 3 for the annual budget deficit. Financial integration The main barriers to integrating these markets were exchange controls regulating the import and export of capital and different regulatory frameworks in the Member States which were a barrier to the supply of such services as banking, insurance and accounting across national borders. Regulations and restrictions had tended to limit the efficiency of these sectors

in many Member States and, therefore, add to their costs. The Unions strategy for the liberalization of financial services has followed three paths removing exchange controls harmonizing essential regulations combined with mutual recognition of other national regulations. In the case of banking, this means that banks can operate across border under the supervision of their national home country authorities harmonising of tax rates.

Exchange controls have been removed and financial services deregulated but little progress has been made in the harmonization of tax rates. The fact that Council decisions on tax rates must be taken unanimously, the importance of the national interests at stake and the wide differences in national taxation systems have been powerful constraints on the Commissions efforts to move harmonisation forward.

Laws and procedures Role of the Council of Ministers the European Council sets macroeconomic policy guidelines 0the Council of Economics and Finance Ministers adopts legislative instruments, drafts policy guidelines and coordinates macroeconomic policies. Role of the European Parliament the Parliament debates economic policies and issues reports and recommendations.

Role of the European Commission proposes legislation and policy initiatives. Monitors Member States economic policies and proposes macroeconomic policy guidelines and recommendations under the excessive deficit procedure. Participates in the G7 meetings of the worlds leading industrial powers. External relations By negotiating as one, the Member

States of the European Union have achieved far more success in promoting free trade in the world than they could have done by operating as single countries. In the process, they have opened many markets for their companies and secured many jobs for their people. The EU is the worlds largest trade grouping and its exports support one job in 10 in the Member States. Laws and procedures Legislative procedures important international trade agreements are

adopted by the Council and require the assent of the European Parliament. Association agreements need the assent of the Parliament before they can be implemented. Role of the European Commission on a mandate approved by the Council, it negotiates multilateral external commercial agreements in the World Trade Organization as well as bilateral arrangements, applies

EU trade legislation, proposes new legislation. United States The EU and the United States form a global partnership, covering not only trade and economics but also cooperation on a whole range of foreign policy issues and global challenges. The economic relationship between the two is characterized by close economic interdependence. The EU and United States are each others most important partners in trade and investment.

Bilateral trade flows in goods and services amounted to ECU 200 billion and total transatlantic investment was ECU 365 billion in 1994. More than three million jobs on either side of the Atlantic depend on this investment. The Presidents of the United States, the Commission and the European Council meet every six months, as do the

Commission and the US Government at ministerial level. Canada Links between Europe and Canada have traditionally been close, fortified in particular by Canadas membership of NATO. Bilateral trade exceeds ECU 19 billion and the EU is the second most popular destination for Canadian foreign investment after the United States.

Regular summit meetings now take place between the Presidents of the European Council, the Commission and the Canadian Prime Minister. In the coming years, the relationship is expected to undergo further political development. Japan This bilateral relationship has been dominated for years by the Unions trade deficit with Tokyo. Japan exports to Europe are almost 50 higher than

European exports to Japan. While keeping up pressure on Japan to remove non-tariff barriers, the Union has also sought to deepen and extend cooperation beyond the field of trade. A joint declaration on EU-Japan relations in 1991 lists shared objectives in the political and economic fields and establishes a consultation framework including annual meetings between the Presidents of the European Council and the Commission, and the

Japanese Prime Minister. Cooperation between the Union and Japan now takes place across a wide range of areas, including science and technology, competition policy, development assistance, environmental policy, industrial policy, industrial cooperation, macroeconomic and financial affairs and transport. Countries of the southern and eastern Mediterranean Relations with the 12 Mediterranean countries with which the

EU has association or cooperation agreements are being relaunched on the basis of a partnership declaration adopted by both sides in Barcelona in November 1995. This lays the basis for closer political cooperation and the EUs broadly-based efforts to promote development in the Mediterranean region which include industrial cooperation, encouraging direct investment and creating

networks between universities and other social institutions The declaration also sets the ambitious target of a free trade zone by 2010 between the Union and the Mediterranean countries represented in Barcelona Algeria, Morocco, Tunisia, Egypt, Israel, Jordan, Lebanon, the Palestinian autonomous territories,

Syria, Turkey, Cyprus and Malta. Countries of Central and Eastern Europe CEECs The collapse of communism led to a surge in the relations between the Union and most of the CEECs, including the signing of association agreements, the so-called Europe Agreements. Currently, there are nine such agreements. Six are in force involving Bulgaria, the Czech Republic,

Hungary, Poland, Romania and Slovakia, while those with Estonia, Latvia and Lithuania are awaiting ratification a tenth has been initialled with Slovenia. These agreements give the signatories associate status and cover both political and economic relations. They establish regular and intensive political dialogue, progressive economic integration and financial assistance. They are of unlimited duration and allow the

CEECs up to 10 years to remove economic and commercial barriers, while Union restrictions on the import of their industrial goods was removed by 1 January 1995 with some exemptions. Russia The EU is Russias largest trading partner by far, accounting for close to 40 of the latters foreign trade. When the Russian and EU national parliaments have finally ratified it, future political and economic

relations will be governed by a partnership and cooperation agreement signed in 1994. This establishes a political dialogue at all levels, regulates the trade in nuclear fuels, allows free EU investment in Russia with full repatriation of profits, liberalizes the activities of foreign banks in Russia, removes all EU quotas on Russian exports apart from certain textile and steel products and allows temporary Russian quotas on some EU imports.

At their meeting in Madrid in December 1995, the European Council asserted that good relations between the EU and a democratic Russia are essential to stability in Europe. The Heads of State or Government said the EU would contribute to Russias democratic reforms support Russias economic reforms, her integration into the international

economy, the development of trade and investment and the necessary conditions for the future establishment of a free trade area between Russia and the EU take into account Russias concerns about NATO enlargement support peaceful settlement of disputes in the CIS area. TACIS the EUs future relationship with Russia is being vitally shaped by the TACIS programme, designed to help her make the transition from a centrally planned to a market economy.

TACIS projects involve, among other things, help in the restructuring of State enterprises and private sector development, reform of public administration, raising agricultural efficiency and supporting improvements in the safety of nuclear power plants. The new independent States NIS Relations with these republics of the former Soviet Union are increasingly regulated by partnership and cooperation agreements whose scope is political,

economic, commercial and cultural. They aim to pave the way for the integration of these countries into the wider European economy. In the last two years such agreements have been signed with Russia, Ukraine, Moldova, Kyrgyzstan, Belarus, Kazakhstan,Georgia, Armenia, and Azerbaijan. The European free trade area EFTA On 1 January 1994, the European Economic Area was born

EEA. Following enlargement of the EU on 1 January 1995 with the accession of Austria, Finland and Sweden, this joins together in one single market the EUs 15 members with three remaining members of EFTA, Iceland, Liechtenstein and Norway Switzerland is also in EFTA but has not signed the EEA Agreement. Among other things, the

EEA agreement grants the three partner countries the four freedoms of the single market - the free movement of goods, services, capital and people and requires them to adopt most EU policies on mergers, state aids, consumer protection, labour markets and the environment. China In 1995, China became the Unions fourth largest export market and its fourth largest supplier. Total bilateral trade reached around ECU 35 billion in 1994, with the

EUs imports exceeding exports by around ECU 10 billion. China is the Unions largest supplier of textiles and clothing. Korea A framework trade and cooperation agreement was negotiated in 1995 to promote closer economic relations and exchanges of information and mutually beneficial investment. In addition, the EU is contributing to the Korean

Peninsula Energy Development Organization in support of the search for peace and stability in the region. Bilateral trade between the EU and Korea is in the region of ECU 15 billion. Other Asian countries The 25-nation summit in Bangkok between European and Asian leaders at the beginning of March 1996 was a major step towards widening and deepening the dialogue between the two regions.

The meeting brought together the 15 EU members with the seven members of ASEAN as well as China, Japan and Vietnam. It will be followed by a similar meeting in the United Kingdom in 1998 and another in South Korea in 2000. Other initiatives agreed in Bangkok include preparing an Asia-Europe investment promotion action plan, creating an

Asia-Europe business forum, setting up an Asia-Europe environment technology centre to support joint research and development in this area and launching an Asia-Europe Foundation to promote cultural exchanges of all kinds between the different participating countries. Asian countries are the largest beneficiaries of the Unions generalized system of preferences GSP scheme which has been in operation since 1971 and allows

imports from developing countries to enter the Union either duty-free or at reduced tariff rates. Australia and New Zealand The political dialogue with Australia has been strengthened in recent years to the extent that there are usually two ministerial-level meetings a year between the two aides. A European Parliament delegation visits Australia every two years while an

Australian parliamentary group visits Europe every year. The EU is Australias most important economic partner taking into account the volume of trade in goods and services and exchanges of investment. Meanwhile, bilateral cooperation covers science and technology, industrial cooperation, coordination of development aid in the Pacific region and energy and environmental matters.

Cooperation between the EU and New Zealand is based on preferential agreements, largely focused on agricultural products. Thus, butter and lamb imports into the EU from New Zealand have enjoyed preferential access for many years. In 1991, the two sides signed a scientific and technical cooperation agreement covering agriculture, biomass, biotechnology, environment, forests, renewable sources of energy and information technologies.

Developing countries The African, Caribbean and Pacific ACP Seventy ACP countries are signatories to the fourth Lomй Convention the first was launched in 1975 and the present Convention runs until 2000 which frees 99.5 of their exports to the Union from customs duties and does not require them to make balancing concessions.

Funds allocated for development aid totalled ECU 12 billion for 1990-95. Latin America All Latin American countries benefit from the generalized system of preferences while 14 countries are covered by specific regional economic and trade cooperation agreements. Trade between the EU and Latin America is worth more than ECU 45 billion and the region has been one of the fastest growing markets for

European exports. Trade with the EU accounts for more than 20 of total Latin American imports and exports, but it is less than 5 of the Unions external trade. Common foreign and security policy World events are constantly challenging the Union to act with the determination and cohesion expected of a world entity of its population size and economic strength.

The Treaty on European Union, which came into force in November 1993, responded by fixing as a Union objective the implementation of a common foreign and security policy including the eventual framing of a common defence policy. The Treaty says that the objectives of a CFSP are to safeguard the common values, fundamental interests and independence of the Union to strengthen the security of the

Union and its Member States in all ways to preserve peace and strengthen international security, in accordance with the principles of the United Nations Charter as well as the principles of the Helsinki Final Act and the objectives of the Paris Charter to promote international cooperation to develope and consolidate democracy and the rule of law, and respect for human rights and fundamental freedoms.

The common foreign and security policy and its instruments Decision-making - it is the European Council of Heads of State or Government and the Council of Ministers which have overall control the European Council only defines the principles and general guidelines for CFSP. However, the European Commission participates in all discussions, as well as the

European Parliament, but it has no direct powers. Common positions - once a common position has been defined by the Council, Member States must ensure that their national policies conform to it. Joint actions - these commit the Member States to acting in a certain way in support of a common position. These included the convoying of humanitarian aid in Bosnia-Herzegovina and sending observers to parliamentary elections in

Russia. The Stability Pact for Central Europe, was the result of a successful joint action. Enlarging the European Union The Commission has begun an analytical examination of the acquis communautaire on 3 April 1998 with the countries with which negotiations have not yet started Bulgaria, Latvia, Lithuania, Romania and Slovak Republic. The accession to the European Union of the candidate countries of central and eastern

Europe requires the strengthening of their institutional and administrative capacity. These countries must establish a modern, efficient administration that is capable of applying the acquis communautaire to the same standards as the current Member States. While support for investment will help candidate countries bring their economic and social structures into line with Community standards, it will not be sufficient to prepare them for

EU membership. Institution building will help them to reinforce their institutional and administrative capacity to the point where they are ready to take on the obligations of membership and to get the most out of joining the EU. Institution building means developing the structures, human resources and management skills needed to implement the acquis. Institution building also means opening Community programmes, such as Leonardo, Socrates, etc to the participation of the candidate countries.

On March 25, 1998, the European Commission approved Accession Partnerships for the 10 applicant countries of Central and Eastern Europe CEECs. Each Accession Partnership AP will help applicants to achieve such objectives as strengthening democracy and the rule of law, protection of minorities, economic reform, reinforcement of institutional and administrative capacity, preparation

for full participation in the internal market, justice and home affairs, agriculture, environment, transport, employment and social affairs, regional policy and cohesion. Culture Forty years of working together, first within the European Community and then the European Union, has made Europeans increasingly aware of their common culture.

The new Treaty introduced as an objective of EU action a contribution to education and training of quality and to the flowering of the cultures of the Member States, encouraging cooperation between Member States in the areas of improvement of the knowledge and dissemination of the culture and history of the European peoples conservation and safeguarding of cultural heritage of

European significance non-commercial cultural exchanges artistic and literary creation, including in the audiovisual sector. The Treaty also said that the Union should take cultural aspects into account in its other actions under the Treaty. Growing achievements Practical achievements in the field of culture are growing in number and significance. The Commission has proposed three action programmes

Kaleidoscope, which promotes artistic and cultural activities, entered into force in March 1996, the Ariane programme, devoted to books and reading, and the Raphael programme which concerns cultural heritage, both currently being discussed within the Community institutions. Actions in 1995 included awarding ECU 4.7 million to 100 projects for the restoration of religious monuments and contributions to training

schemes in conservation and restoration. The Commission also assisted the translation of 85 works by European authors, with special priority being given to translation into less-widely-spoken languages. Previous actions worthy of mention are The protection of architectural heritage pilot projects to conserve the Communitys architectural heritage the funding of work on the restoration of European monuments and sites of exceptional historical importance grants for training in restoration

and conservation support for cultural events connected with the protection of cultural heritage. The promotion of cultural and artistic creativity and cooperation The Kaleidoscope pilot scheme and, since 1996, the Kaleidoscope programme to support cultural activities of European dimension cultural events, encouragement of artistic creation, cultural coopeation network.

The European City of Culture Copenhagen 1996, Thessaloniki 1997 and the European Cultural Month St Petersburg 1996, Ljubljana 1997, established in 1985 and in 1990 respectively by the EU Ministers for Culture, aim at helping to bring the people of Europe closer together and to improve public access to cultural aspects of the city, region and country concerned. The European Union Youth Orchestra and the

European Union Baroque Orchestra, set up in 1976 and in 1985 respectively, provide training to young musicians and are the ambassadors of European culture through their international tours. The promotion of books and reading Support for contemporary literary translation. Support for cooperation projects to promote books and reading in Europe. The European literature prize and European translation prize -

Aristeion Prize. Grants and travelling expenses for courses at colleges for literary translators. The promotion of the European audiovisual sector This recorded its first practical achievement with the Television Without Frontiers Directive, which lays down the minimum requirements for the free movement of television programmes within the EU. The MEDIA programme promotes the development of Europes audiovisual industry. Objectives of European

Investment Bank fostering the economic development of the less favoured regions improving European transport and telecommunications infrastructure protecting the environment and the quality of life, promoting urban development and safeguarding the Communitys architectural and natural heritage attaining Community energy policy objectives enhancing the international competitiveness of industry supporting

the activities of small and medium-sized enterprises extending and modernising infrastructure in the health and education sectors as well as assisting urban renewal, under the Amsterdam Special Action Programme in support of growth and employment. Outside the Union, the EIB supports the Unions cooperation and development aid policies in over 120 countries in Africa, the Caribbean and the Pacific, the

Mediterranean area, Central and Eastern Europe, Asia and Latin America.