European Economic Commission - Essay Example

?The Economic Arguments for Further Enlargement of the EU Just as happens among human beings, no country has the abilityto exist in isolation without engaging her immediate or far neighbors. This is because countries as happens in organizations or institutions have particular affairs to run and that it cannot fully satisfy when isolated. For instance, countries have budgets to, which require expansive engagement with other countries to achieve reasonable growth and prosperity. Countries also have security demands, which they can only address when cooperating with others. In addition, countries have populations that always demand jobs to generate income for sustenance over particular period. Effective creation of jobs to sufficiently address and resolve job shortage can only be possible when countries engage one another. Moreover, to generate revenues for economic and social development, countries need to engage in trading activities that are only possible through positive relationships. It even becomes very enjoyable for countries when they collaborate under particular established institutions tasked to accomplish and resolve different agendas and needs in the manner that intermediates the members. European Union (EU) formally called European Economic Commission (EEC) is one such intergovernmental institution established to oversee and intermediate over the divergent needs and expectations of the member European countries. European Union (EU) came into existence since 1948 when the world was still nursing the pains of the World War II. The main reasons for the creation and establishment of EU were to bring different Europeans countries together with aim of promoting political and social stability in the region and establishing effective economic cooperation among the member states. When starting, EU has only five member countries that have risen to reach 27members (Sajdik & Schwarzinger 2008, p. 10). To ensure effective execution of roles, EU established various institutions including the Council tasked with representing national governments, European Parliament that represents people within the member countries, and European commission that collectively represents European interests. European Commission specifically addresses different issues among the members and reconciling member countries on issues of common interests. European Union (EU) also exercises other crucial mandates that involve and not limited to promotion of democracy and good governance within the member countries and abroad. This has manifested clearly through EU establishing very transparent institutions to manage its affairs. Manifestation of promotion of democratic agenda is also evident through the Treaty of Lisbon signed in 2009 to define the institution’s Charter of Fundamental Rights (Schadler & Schadler 2005, p. 24). It is an obligation of EU institutions and the governments of member countries to uphold and respect the laws contained in the Lisbon Treaty. EU also has an agenda to encourage and promote regional economic stability, independence and unity to achieve strong bargaining power for their trading items. The economic integration is also important in facilitating and encouraging free movement of goods and people across the borders of the member countries. The institution also has a strong common currency acceptable for trading among the member countries and for common bargaining in the international trade (Quadrio Curzio & Fortis 2008, p. 17). EU also has an agenda to develop and support creation of employment opportunities and expansion of national wealth to ensure substantial benefits to the citizens within the member countries. Further enlargement of EU to absorb more members will pose both positive and negative economic implications on the members and the institution as whole. To begin with, enlargement of the European Union (EU) has the potential to boost the economic status of the member countries. EU considers economic growth and integration as part of its agendas towards the members. This means that EU as a single and strong body with massive bargaining power and influence has the responsibility to negotiate business terms with the nonmember countries in the manner that benefit its members. EU through its European Commission scans the global environment to identify and find business opportunities for companies and industries within the member countries (Lorca-Susino 2011, p. 4). For instance, EU has been engaging in mission hunting for investment opportunities and on behalf of the local companies in the emerging markets of Russia, India, Indonesia, Brazil, South Africa and China. EU has been performing this role by negotiating terms of business operations in the manner that enable its investing companies realize sufficient profits from their operations. EU has involved in negotiating taxation and legal requirements for the EU based foreign companies. The negotiations have been in the manner that advocates for lower tax margins and presents few and softer bureaucracies for the EU based investing companies. European Union (EU) is also busy seeking to expand market and competence of the member countries in the global markets. For instance, EU is in serious struggle advocating for standardization of manufacturing processes with other countries to avoid technical barriers that can compromise competiveness of the region’s products. To update and enforce standardization measures, EU ensures close and maintained dialogue with the foreign countries and authorities. In fact, EU’s efforts to eliminate technical trade barriers has proved fruitful through the standardization of EU-China web portal (CESIP). These achievements have only been possible because of the nature of cooperation and significant number of the EU members that accords great influence. It then means that enlarging the EU by increasing its membership will make it more powerful and very influential in pursuing and achieving its goals that are beneficial to the economic statuses of the members (Buti, Szekely & Keereman 2009, p. 11). Enlargement of EU can have massive potential to result to proper economic growth and development to the member countries. This is because enlargement of the organization creates bigger markets for consumption of locally produced products and services. Enlargement of the organization has the potential of boosting economic growth and development for new member states who will realize new, expanded and liberalized markets for their goods and services (Sajdik & Schwarzinger 2008, pg. 13). This will help them reap more profits that can help grow other sectors of the countries’ economies. Enlargement of the EU poses economic benefits for the new underdeveloped countries whose citizens are likely to benefit from new employment opportunities offered by companies from the developed member countries who also seek cheap labor. Expansion of EU through absorption of new members also helps the old member countries gain access to new unexploited natural resources available in the new member countries. In most cases, underdeveloped countries like Bosnia and former Yugoslavia among others tend to exhibit low technical knowhow that may impede and compromise their efforts to fully exploit the natural resources available (Quadrio Curzio & Fortis 2008, p. 20). Whenever a country cannot fully exploit its natural resources, it may not realize substantial growth and development derived from the natural resources. This means that the individual country will suffer from high unemployment rates that will define poor living standards in the particular country. To stop such economic conditions, countries have liberalized their markets and economies through enforcement of less stricter laws that promote exploitation of natural resources and work force to create and increase national wealth. In the same context, enlarging EU has the impact of growing the underdeveloped countries especially those in the Eastern Europe. Incorporating new members in EU means expansion of markets and raw materials for production of goods and services. Enlargement of European Union can also support development of smaller competent unions among the member countries who seem to have very similar goals and aspirations. United Kingdom (UK) demonstrates example of potential benefits that member countries of European Union (EU) can gain upon enlarging the institution. Being a member of the European Union has enabled UK experience massive economic growth and development (Degrauwe, 2007, p. 16). Membership into the EU has enabled UK integrate its economic activities to an extent of achieving a single market status that is very strong and larger than those of USA and Japan combined with a Gross Domestic Product (GDP) of nearly 11 trillion. The UK single market serves a population of nearly 500 million people. To ensure efficiency and effective achievement of its business goals, UK has ensured to enforce laws allowing free trading movement of goods and services within the borders of the member countries. The institution has very categorical set of common rules governing practices of the member states and averting the need by member countries to comply with twenty-seven different sets of rules set by EU. Introduction of the UK single market in 1992 was the GDP of EU rise by 2.2% and creation of 2.75 employment opportunities by 2006. UK also defines the largest contributor of EU exports to other countries. Introduction of the UK single market within the whole EU has also helped in the removal of nontariff barriers to trade that existed in Europe (Degrauwe 2007, pg. 17). Enlargement of the European Union also works to ensure reduction in the cost of living and improved living standards within the member countries. Currently, liberalization laws existing in the EU make it possible for businesses to determine their own prices, a practice that ensures fair competition among companies and business organizations in EU. The nature of competition existing in the EU makes individual manufacturing companies engage in production of quality and high standard goods and services (Belke & Spies 2008, p. 370). The companies and business organizations also engage in fair price wars, which ensure that citizens obtain goods and services at ever-low prices relative to the quality of the given product. Enlarging the union will mean further competition and creation of wider market subjected to common business laws. It will also mean continued improvement in the quality of goods and services since the expansion will absorb new players who did not exist initially. Enlargement of EU will also mean further growth and expansion of the local business who stand best opportunity to venture in newly incorporated economy and guided by the fair EU business laws. This will ensure significant economic growth of the member countries as local companies investing in the foreign economies will bring home their profits to expand the financial bases of their countries’ economies. Wide financial base in an economy is motivating development factor considering the availability of funds for entrepreneurs to borrow and invest in businesses. Following the current trends, enlarging EU will mean stiff competition among the companies and business, which will in turn lower cost of goods and services in the wider EU economy. This will again escalate competitive advantage of the union against other countries. The low cost of goods and services within EU will work to attract many international consumers making EU to be the leading provider of goods and services (Tatham 2009, p. 7). Increased global consumption of EU products will men increased production activities that will in turn mean rise in demand for workers. This will have a general effect of reducing unemployment rates within the EU member countries, as most employees will have space to join the job market. Moreover, enlarging EU will also work to reduce cost of production for companies and businesses considering that the expansion involves admission of many jobless people into the cycle. This increase in the population of employees has the impact of creating competition for the available job opportunities and giving room for selection of professional and competent employees who will also be willing to accept lower pay. Trichet (2004) speculates that enlargement of the European Union through recruitment of new members into the institution will work to ensure that individual countries specialize in production of particular goods and provision of certain services. The nature of competition likely to increase due to enlargement of the EU has the likelihood to force manufacturing and service-providing companies improve quality of their products above the normal standards. These kinds of competition are likely to force the competition companies within the same industry and having origins within the EU member states to amalgamate and build a strong brand. When this happens, the individual companies formed due to amalgamation will have the potential to build strong products that will have high competitive advantage and strong brand name in the international markets. Strong brand names coupled with strong competitive power has the potential to result into strong bargaining power. This will ensure that products and services produced within EU achieve high international sales volume and do so at average prices that profits the manufacturing companies. Enlargement of the European Union (EU) also has numerous economic disadvantages to both the existing EU members and the new entrants awaiting accession into the union. As demonstrated by Bruinsma and Hakfoort (2005, pg 6), one of the economic disadvantages already under effect among the EU countries relates to increased migration facilitated by free movement of people across the borders of the member countries. Liberalization of the borders has seen massive rise in the total population of citizens in the United Kingdom. Statistics speculate that UK’s population in the next decade will reach 70 million people. Large of portion of the immigrants into UK are job seekers who view and perceive UK as the best labor market within the entire EU. This big population has already begun to exert pressure on the economic structure in the region to an extent of compromising the livelihood of the entire region. The increase in population has led to serious congestion in the cities within UK to an extent of slowing important economic activities. For instance, the increase in population has resulted to longitudinal increase in car ownership within the region to the extent of overpowering the existing infrastructure (Schadler & Schadler 2005, p. 76). The massive increase in car ownership has seen tremendous rise in traffic congestion, which have direct negative impact on the economic prosperity of the region. This is because commercial vehicles spend abnormally long hours on the roads and eventually affects the business process. Businesspersons also get trap in traffic congestions and end up wasting a lot of time that would otherwise be crucial to initiate and strike important business deals. The increase in population due to high rate of immigration facilitated by freeing of the inter-border labor movement has led to escalation of house prices in the UK. The huge population means rise in demand for basic commodities like housing. This has greatly disadvantaged the native population that initially enjoyed relative cost of housing. Another disadvantage of enlargement of European Union (EU) relates to the high membership charges paid yearly. For instance, EU charges UK a total sum of ?6.4 billion (Whyman 2001, pg. 29). Enlarging EU will mean recruitment of new poorer countries since the richer countries are the original and in fact the founders of the organizing. The main intention of the EU for all its members is to improve economic stability by providing funds for the new recruit members integrate their system to fair with the general standards of EU. The money spent by EU on the purposes of integration comes from the contribution of the member states. Enlarging the union will demand that already member countries increase their contributions towards funding of EU operations. The increase may be expensive on the side of the contributors and increase burden instead of leveraging members from excess spending. Enlargement of the European Union (EU), which imposes binding commitments before acceding is likely suffocate new entrants and poor countries. It is worth recognizing that EU as an institution has its goals and objectives to achieve, which include creation and establishment of a strong market force among the member countries. This means that no member country reserves the right to trade with a non-member country. An individual member country cannot attempt to engage in trade agreements with non-member countries without involving EU. In fact, EU member countries enjoy sufficient freedom when trading with each other but find it difficult to trade with non-member states (Kilmister, 2001, p. 3). This means that even if cost of particular products is high in one of the member countries, a buying country reserves no right to move outside the EU block to acquire the same product offered at lower price in a non-member state. This is very disadvantageous to the developing and poor acceding countries, which literally need to cuts cost of production and spending to growth their economies. With such policies in action, EU proves a hurdle rather than a stimulator to the growth of the poorer member states who need to grow their economies. EU instead appears to be supportive of the economic prosperity of the developed member countries that in effect quote high prices for their goods and services, and enjoy protection of the larger union (Thompson, 2013). Moreover, the fact that EU is an economic block initiating business process for the member countries makes it more disadvantageous to the developing countries. This is because of the long economic process and bureaucracies that a developing country may require satisfying before importing any crucial raw material that is absent within the EU member countries. This generally works to waste much time that the individual member country would invest in another important economic activity. Enlargement of European Union (EU) and the longitudinal use of Euro as the commonly accepted currency pose serious risks to the member countries. Already EU has imposed use of Euro that all member countries should use in performing all business transaction. To begin using Euro, the individual member country must abolish its own currency and consequently loses control over the interest rates within its local market (Hamori & Hamori, 2010, p. 53). This fact exposes the member countries to serious economic risks that lead to liquidation of a country’s economy especially when Euro succumbs to unfavorable global economic conditions. In the event of unfavorable market forces on Euro, the member countries will have to suffer helplessly since they already sold their allegiance to international currency, which limited their exercise on the local markets. Lorca-Susino (2011, p. 7) describes that the centrality of Euro as the common currency among EU member countries also impedes the ability of the individual member countries determine interest rates that can help attract investors to spur economic growth and development. The forceful use of Euro as the common currency that all members should use for daily economic activities also limits economic independence of the member countries. Gaining membership in the EU marks the end of economic sovereignty of an individual country as the member country cannot adjust exchange rates on goods and services and trade to achieve the desired economic growth and competence (Lazar 2009, p. 525). With the use of Euro, a member country of EU cannot initiate or establish policies to encourage foreign consumption of its goods and services by the foreign non-EU member countries. References Belke, A. and Spies, J 2008. Enlarging the EMU to the east: what effects on trade? Empirica, 35(4), pp. 369-389. Bruinsma, W., & Hakfoort, J 2005. The expansion of the EU: between hope and fear. Assen, Royal Van Gorcum. Buti, M., Szekely, I., & Keereman, F 2009. Five years after the enlargement of the EU. . Cherunilam, F., 2008. International Economics. Degrauwe, P 2007. Economics of monetary union. Oxford, Oxford Univ. Press. Hamori, S. & Hamori, N., 2010. Introduction of the Euro and the Monetary Policy of the European Central Bank. Singapore, World Scientific Pub. Co. Kilmister, A., 2001. Enlarging the European Union to the east: Issues and problems. Teaching Business & Economics, 5(1), pp. 3-3. Lazar, I 2009. European Union's Financial Instruments for Economic Recovery of the Member States. Annales Universitatis Apulensis: Series Oeconomica, 11(1), pp. 525-530. Lorca-Susino, M 2011. The Euro in the 21st century economic crisis and financial uproar. Farnham, England, Ashgate Pub. http://public.eblib.com/EBLPublic/PublicView.do?ptilD=623985. Nicolaides, P., 1999. The economics of enlarging the European Union: Policy reform versus transfers. Intereconomics, 34(1), pp. 3-3. Nir Kshetri, University of Strathclyde and Birmingham Business School, Williamson, N.C. and Andreea Schiopu, University of Strathclyde 2007. Economics and politics of advertising: evidence from the enlarging European Union. European Journal of Marketing, 41(3), pp. 349-366. Philipp, V.C 2001. Enlarging the EU: How can the costs be minimized? Intereconomics, 36(2), pp. 77-86. Quadrio Curzio, A., & Fortis, M. 2008. The EU and the economies of the Eastern European enlargement. Berlin, Physica-Verlag. Sajdik, M., & Schwarzinger, M 2008. European Union enlargement background, developments, facts. New Brunswick, N.J., Transaction Publishers. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=395696. Schadler, S & Schadler, S., 2005. Euro Adoption in Central and Eastern Europe Opportunities and Challenges. Washington, D.C., International Monetary Fund. http://proxy.library.carleton.ca/login?url=http://www.elibrary.imf.org/view/IMF072/02115-9781589063709/02115-9781589063709/02115-9781589063709.xml. Tatham, A. F., 2009. Enlargement of the European Union. Alphen Aan Den Rijn, Netherlands, Kluwer Law International. Thompson, S., 2013. The Disadvantages of Regional Economic Integration. . Trichet, J., 2004. EU Enlargement: challenges and opportunities. . Whyman, P., 2001. The impact of Economic and Monetary Union on British business. European Business Journal, 13(1), pp. 28-36. Read More