European Business Environment, Essay Example

The European Union affects individual citizens of member states in many profound ways. Embodying principles of democracy, human rights, and economic and political freedoms, the European Union aims to promote harmonization between member states. For me as for other EU citizens, the effects are profound, including enhanced mobility, job opportunities, and academic opportunities. These ramifications are precipitous, and all in all, the enhanced competition of the EU has greatly contributed to the quality of life available in member states.

One of the most profound ways in which the European Union affects me is with the common market for all member states of the Union. The common market of all member states has many profound ramifications for the citizenries of all EU member states. As McCormick (2011) explains, economic integration has always been seminal to the European Union, a driving force propelling the member states of the emergent union. Case in point is the fact that no less than three of the primary goals of the Treaty of Rome give priority to economic integration (p. 167). One of these goals was for a customs union to be established, whereby all member states of what was then the European Economic Community (EEC) would agree to abolish tariff barriers and other obstacles to trade with respect to each other, and establish a common set of tariffs to regulate external trade. Similarly, the Treaty stipulated the creation of common commercial policies with respect to all countries outside of the EEC (Fairhurst 2010; Leonard 2010, p. 103; McCormick 2011, p. 167; Steiner, Woods & Watson 2009, p. 324).

The second key goal was the creation of a single common market, one that would allow for people, goods, services, and money to flow freely across national borders (McCormick 2011, p. 167). As Turner (2011a) explains, the internal market has removed barriers to trade within the European Union (p. 61). Under Article 26, four freedoms are identified and protected: “free movement of workers”; “freedom to private services”; “free movement of capital”, and “free movement of goods” (p. 61). A key ramification of this for me as an EU citizen is greater economic efficiency: without government intervention in the form of tariffs and other barriers to trade, as well as government interference in the movement of persons, goods and services are generally cheaper and of better quality than they would be otherwise (Turner 2011b).

A key part of the reason why this is so can be found in the EU’s policy on state assistance to private industry, i.e. subsidies. Because differing levels of state assistance in the form of subsidies would create economic distortions that would privilege national industries that received such subsidies over their rivals who did not, all member states had to arrive at a common policy on state assistance to private enterprise (McCormick 2011, p. 167). Finally, a common agricultural policy was established as a major goal at the Treaty of Rome: a policy establishing guaranteed prices for produce, in the name of stabilizing agricultural markets and assuring food supplies (McCormick 2011, pp. 167-168; Nugent 2006, p. 354). In service to these goals, the 1985 Schengen Agreement removed border controls, and the 1986 Single European Act “aimed at completing the single market” (McCormick 2011, 168).

The Common Agricultural Policy (CAP) is a key achievement of the European Union. In 1958, when the customs union was first implemented, agriculture in European member states was subject to many protectionist measures. As Neal (2007) explains, members’ tariffs on all foodstuffs averaged some 14.2%, thereby raising costs on imported foodstuffs in order to protect domestic agriculture from competition (p. 64). The key reason for this, however, was that different member countries had different challenges and different policies. Agriculture as a percentage of GDP ranged enormously between member states, from a mere 8.4% in Belgium to a full 23% in Italy. Farm size varied, as did the degree of mechanization and—not surprisingly—what the farmers actually made (p. 64). Italy and (at the time) West Germany, the member countries with the least efficient agricultural sectors, wanted to reduce the speed with which internal tariffs were dismantled, while France and the Netherlands, with their highly efficient agriculture, wanted them dismantled as soon as possible (p. 64).

Overall, however, the goals of the CAP were remarkably balanced in terms of what they offered to different actors, and in many, many ways they have proven enormously beneficial to the citizenries of the member states of the European Union. Increasing agricultural productivity was the seminal goal, and the promotion of optimization, including mechanization, was propounded as the means by which this could be achieved (Neal 2007, p. 65). A second concern was ensuring fairness to the agricultural community, and to this end policies were drafted to increase the per capita income of farmers. Other concerns including the stabilization of markets, and ensuring reliable supplies and prices (p. 65). The means established to reach these goals included a single market, “the harmonization of prices and exchange rates,” subsidies for farmers—an important exception to a general anti-subsidy stance on the part of the EEC and now the EU—and joint financial responsibility through the European Agricultural Guidance and Guarantee Fund (EAGGF) (p. 65). The policy was so successful that by 1980, the then-EEC was able to achieve a net export balance with respect to foodstuffs (p. 65).

To this day, the policy has served as the groundwork for providing affordable agricultural products to the citizenries of the various member states of the European Union, and it is a major way in which the European Union impacts me as an individual. In effect, every time I go to the store, I am able to benefit from the affordable foodstuffs available from throughout the EU thanks in no small part to the CAP.

The free movement of goods is governed by the so-called Cassis de Dijon principle, after the famous court case involving the French liqueur manufacturer of the same name (Turner 2011a, p. 63). Any good that is lawfully produced in one member state may be sold in any other member state. The only exceptions are highly specific, actionable concerns involving such concerns as “public morality, public policy, or public security,” as well as health concerns, and “protection of industrial and commercial property” (p. 63). What this means is that industries in my own home country of Germany must compete on a level playing field with their counterparts and rivals in France, Belgium, The Netherlands, Britain—where I now live—and all other member states.

The EU Single Market Act II is an attempt to increase competition all the more. As the BBC (2012) explains, the Single Market Act II is pushing for still-greater deregulation to increase flows of goods, people, and capital across the borders of the 27 nations that make up the EU area. In particular, the act is aimed at increasing employment among the young, since the region has been hit by the eurozone crisis. Provisions include such measures as increasing the efficiency of, and consumer confidence in, online payments; increasing integration of passenger rail services; increasing the integration of EU airspace so that it can be operated as a single entity, an achievement that is expected to save 5 billion euros annually, and opening up energy markets to give the EU’s 500 million citizens more choices. Specifically, that last proviso will allow EU citizens to “choose their power supply from across the whole EU region,” which is expected to save 13 billion euros a year if the cheapest tariff is selected by all citizens (BBC).

The European Commission (2012) itself stated unequivocally that “a strong, deep and integrated Single Market creates growth, generates jobs and offers opportunities for European citizens which were not there 20 years ago.” The idea of integrating EU passenger rail, the Commission explains, is to promote competition, which will help to increase the efficacy of services offered and generally keep prices down. For me personally, that will mean cheaper travel across the European Union, which is important to me because I love to travel, and have travelled not only within the EU but also abroad. And the investments in the digital economy of e-commerce are expected to facilitate more economic activity. Since this will mean more demand, it is likely that the spill-over effects will ultimately help me over the course of my career.

Free movement of persons is another fundamental right in the European Union. Under Article 45(2) of the Treaty on the Functioning of the European Union (TFEU), it is illegal to discriminate based on nationality for the purposes of “employment, remuneration or other conditions of work” (Brucker & Eger 2012, p. 149). Workers in the EU have a number of stipulated rights under Article 45(3) of the TFEU, rights that allow them to accept work in any member state of the Union, and to move freely within, and live in, member states for this purpose (p. 149). Thus, the key emphasis is on the free movement of persons for the purposes of work within any of the member states (Molle 2006, p. 103).

As a German national who has been living, working, and studying in the United Kingdom for two years, I have personally benefited from this right, because it allows me the same access to travel, living, work and study within the United Kingdom that I would have if I had been born here. Of course, integration also means that I and other workers must compete with those workers on a reasonably level playing field, ‘level’ defined in terms of a lack of state subsidies. Since the euro has not changed the fact that wages still differ between member states, the playing field is by no means perfectly level: the point is that there is increased competition and less inefficiency, which generally leads to better prices.

As Molle (2006) explains, the fact that different countries have different wages is implicitly accepted in the Treaties (p. 105). Thus, while so much of the EU entails economic harmonization, wages remain at different levels in different countries, due to a number of quite salient differences between different EU member states, including “industrial structure, productivity and supply factors” (p. 105). As long as wages are still different by country, workers from low-income, low-wage countries will continue to seek work in high-income, high-wage countries. While the effects of this are particularly noticeable in agriculture and other low-skilled industries, in general they do have the effect of making for more competition for at least some workers within higher-wage countries (p. 105).

In fact, overall the policy produces winners all around. For I and others looking for work, the integration of the member states means that we have access to jobs in multiple countries. For example, getting my job as a customer service advisor with a British company, while not exactly ‘easy’, was not any harder for me because of my German nationality: I did not have to get a special work visa or other permit from the British government to be able to work here. The mere fact that as a German citizen I am also an EU citizen was sufficient. The arrangement is also advantageous to employers, such as the company that hired me, because they have access to a pool of labour that encompasses several countries. Finally, all of this increased efficiency means that production costs that once differed between countries become more similar, because the labour market is no longer segregated, or semi-segregated, according to nation (Berry & Hargreaves 2004, pp. 185-200; El-Agraa 2011, p. 146; Molle 2006, p. 103).

The European Court of Justice (ECJ) has ruled on a number of cases involving these rights. A key aspect of these rulings is a legal doctrine that not only direct, but also indirect discrimination is impermissible. The Sotgiu decision, for example, condemned the German Postal Services for a policy whereby foreign workers did not receive an increase in a separation allowance given to German workers who were employed at some distance from their place of residence (Brucker & Eger 2012, p. 151). Another important case was Gebhard, wherein a German national with a law degree who had practiced in Germany, and then successfully worked in Milan, was “suspended by the Milan Bar for using the title avvocato without being registered” (pp. 151-152). The ECJ ruled that in principle, requirements for qualification were valid as standards and should be complied with. Ergo, Gebhard should have registered with the Milan Bar. However, the ECJ also found that relevant experience, such as Gebhard’s ten years working with a Milan law firm, should count in a professional’s favour with the national authorities (p. 152).

The definition of ‘worker’, and what rights may accrue to a jobseeker, have proven key sticking points. In the case of Levin v. Staatssecretaris van Justitie, the European Court ruled on the case of Mrs. Levin, a British national, who was married to a South African national (Weatherill 2007, p. 425). Due to not being what was considered to be gainfully employed, Mrs. Levin was denied a residence permit by the Dutch authorities. The European Court observed that Article 48 (now Article 39 EC) does not precisely define the notion of a ‘worker.’ Mrs. Levin was employed, as a teacher who gave an average of 12 lessons a week, and so the Court was able to find in her favour and define a ‘worker’ as well. Specifically, in Mrs. Levin’s case, the Court ruled that she had a right to a residence permit, because even though her work was not sufficient to provide for the means of her subsistence, and she did supplementary work for her husband, she was still a ‘worker’ and as such had a right to freedom of mobility, residence, and employment (p. 426).

However, in R v IAT, ex parte Antonissen, the Court had to rule on the case of a jobseeker who was trying to defeat a deportation order, in accordance with a policy that limited job-seeking for foreign nationals within the host country to a period of six months. A Belgian national, Antonissen, had been attempting to obtain employment in the United Kingdom for over six months, and the British authorities had accordingly ordered his deportation (Weatherill 2007, p. 427). The European Court ruled in favour of the United Kingdom authorities, holding that the British policy did not violate the rights of free movement of workers (p. 427). The only loophole left by the Court’s ruling was the proviso that a jobseeker might be able to defeat a deportation order, even after six months, if they provide evidence of continued job-seeking activity, and legitimate prospects of actually acquiring a job (p. 427). A key ramification of this for me is that while I can stay in Britain and work indefinitely, if I were to lose my job I would have to find another or else risk being deported—unless I were to acquire British citizenship, of course.

The EU focus on integration and competition has also affected me in the arena of higher education, through the Bologna Process in particular. EEC initiatives to achieve economic integration and unlock competition between the institutes of higher learning in the respective member nations began to meet with success under the Erasmus Mundus programme, which in turn paved the way for greater integration under the European Union (Maassen & Musselin 2009, p. 5). Ironically, the Treaty of Maastricht was something of a step back for the integration project, but since the close of the 1990s a great deal more progress has been made. Since the member states’ signing of the Bologna Declaration in 1999, higher education in the EU has been subject to increasing harmonization (p. 6). The goal of this process is to create a European Higher Education Area (EHEA), designed to increase student mobility (Garben 2011, pp. 10-13). This has certainly benefited me, inasmuch as it has made it relatively easy for me to study in a British university as a German national.

The EU profoundly affects my life, from the food that I buy in the supermarket to the fact that I can work, study, and live in the UK as a German national, and enjoy much the same rights and benefits as any British citizen would. All in all, the EU stands for competition and harmonization: liberalizing barriers to the movement of goods, persons, and finance in order to unleash human creative potential and provide better opportunities for individuals. As such, it has succeeded in promoting a community of member states whose citizens are increasingly less ‘foreign’ to each other, and increasingly more comfortable living, working, studying, and travelling in each others’ countries. For me, this is by far the greatest legacy of the European Union, and I take it as the cardinal benefit of this international community of which I am a citizen.

Bibliography

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