Treaty on European Union

Impact

The path to the signing of the Treaty on European Union was not entirely smooth. Negotiations were often contentious, and while the majority of Europeans favored in principle the concept of greater cooperation, in practice many were reluctant to cede national autonomy, so the ratification votes tended to pass by narrow margins. Great Britain's refusal to adopt the euro, for example, was in part the result of rational self-interest—Britain, with its robust economy, did not want its economic policies dictated by bureaucrats in Brussels—but also in part by sentiment and tradition, for it was thought that by relinquishing the pound as its currency, Britain would be relinquishing a portion of its identity. Some of the fears of the treaty's opponents were partially realized in the late 1990s when evidence came to light that the European Commission was not holding itself accountable to the people of Europe. Widespread charges of corruption, cronyism, and incompetence were leveled at the commission. Furthermore, the European Parliament, which, in contrast to the commission, is democratically elected by the people of Europe, came to be seen as a weak organization. In turn, many have objected to the power of the Court of Justice of the European Union, for in the application of law, EU law supersedes the laws of individual member nations. The upshot is that many Europeans feel that the Court of Justice can be heavy-handed in effectively crushing the laws and legal traditions of member nations.

Other observers have pointed to the weakness of the EU as established by the treaty. They note that the foundation of the treaty lies on such idealized concepts as “cooperation,” but the effect of this emphasis on cooperation, for example, is that decisions often need to be unanimous. For instance, the Common Foreign and Security Policy pillar provides a forum in which foreign policy is discussed and proposals are made for united actions that enhance security and defense. The problem is that this pillar often fails in its endeavors. Some Europeans would like for the EU to develop its own common defense pact, but many argue in response that Europe is already protected by the North Atlantic Treaty Organization and that U.S. participation is needed for any defense posture to have teeth. This argument gained force when the nation of Yugoslavia disintegrated.

Yugoslavia, which had been under the influence of the Soviet Union, was in many senses an artificial country, forged out of six republics: Bosnia and Herzegovina (often referred to simply as Bosnia), Croatia, Macedonia, Montenegro, Serbia, and Slovenia. Additionally, two autonomous provinces, Vojvodina and Kosovo, existed within Serbia. Ethnic tensions divided the country, and four of its six republics declared their independence in 1991—1992. The result was a period of civil warfare, and the EU seemed unequal to the task of confronting the crisis. The EU member states were unable to reach agreement on a course of action; some did not want to be drawn into a war against other Europeans. The international community intervened only when the United States and the North Atlantic Treaty Organization, acting under UN authority, conducted military operations in Bosnia. The 1997 Treaty of Amsterdam attempted to resolve the EU's inability to act, but again the union was expressing intent rather than taking concrete action.

Despite these weaknesses, the impact of the Treaty on European Union and the formation of the EU was—and continues to be—profound and far reaching, particularly in the economic sphere. It has turned Europe into a single major trading bloc of nearly five hundred million people—a bloc whose size makes it more than able to compete effectively with similar trading blocs in North America and Asia. Collectively, the nations of the EU produce roughly 16.6 percent of the world's gross domestic product. The reduction of trade barriers and tariffs, the adoption of a common currency and common central bank policies, and the opening of borders have reduced frictions and inefficiencies, thus enabling Europe to make its voice heard in world affairs.

Supporters of the treaty and of the EU point to numerous advantages afforded by the treaty. They note, for example, that the Common Agricultural Policy created as a result of this and earlier treaties has benefited farmers and consumers by creating a single market for farm products and by protecting European farmers from external competition. The Common Fisheries Policy helps to prevent the overfishing of common waters. The European Investment Bank offers loans that promote economic development. Various agencies use pooled funds to help level out some of the economic disparities between the richer nations of northern and western Europe and the poorer nations of southern and eastern Europe.

Most important, the EU's Economic and Monetary Union led to the integration of monetary and budgetary policies, stabilizing currency values and interest rates. Prior to the introduction of the euro, considerable inefficiencies abounded, such as where currencies had to be constantly converted into one another. A corporation in France, for example, denominated its activities in the French franc. If the corporation had a factory in Germany or sold its products in Germany, it had to deal with fluctuating exchange rates between the franc and the German deutsche mark. And if that French-owned factory exported its German-made products to Italy, now the Italian lira and its fluctuating value in relation to both the franc and the deutsche mark introduced additional measures of uncertainty. The common currency of the euro, along with policies designed to curb inflation and stabilize interest rates across Europe, has eliminated many of the inefficiencies that sapped value from Europe's economies. It has also reduced the instability of currency speculation, whereby financial agents direct large currency flows across borders to take advantage of changes in exchange rates and interest rates.

The process of introducing the euro was gradual. It was a “virtual” currency used for cashless transactions and accounting purposes beginning in 1999. Euro coins and banknotes were introduced in 2002. As of the end of 2023, twenty nations were using the euro.

Other aspects of the EU benefit citizens more directly. A student from Germany who wishes to study in France or the Netherlands can do so without having to undergo time-consuming procedures allowing him or her to gain admission to a university in another country and, especially, to live there. People who live near borders can freely pass into neighboring countries for recreation or to shop without having to worry about exchange rates or carrying passports. And to the benefit of the European economy and world travelers alike, tourism has been greatly facilitated. Prior to the Treaty on European Union, a tourist traveling from country to country in Europe had to deal with a wallet or purse full of different currencies and had to constantly convert one currency into another. Delays were common at border crossings as passports had to be examined. Today, a tourist can fly into, say, Munich, Germany, rent a car, and pass into Austria on the way to Salzburg in much the same way that tourists in America can drive from state to state. Only one currency is necessary, and armed border guards are a thing of the past.

In December 2007 the member states of the EU signed the Treaty of Lisbon, which entered into force on December 1, 2009. The Treaty of Lisbon is an amendment to the Treaty on European Union intended to boost efficiency. Among other changes, it gives a larger role to the European Parliament in the EU's legislative process and makes the EU human rights charter, the Charter of Fundamental Rights, binding on EU member states.