Basics and Backgrounds
- The European Union is a group of 28 countries that operate as a cohesive economic and political block.
- 19 of these countries use euro as their official currency. 9 EU members (Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom) do not use the euro.
- The EU grew out of a desire to form a single European political entity to end centuries of warfare among European countries that culminated with World War II and decimated much of the continent.
- The EU has developed an internal single market through a standardized system of laws that apply in all member states in matters, where members have agreed to act as one.
- In 2012, the EU was awarded the Nobel Peace Prize for advancing the causes of peace, reconciliation, democracy and human rights in Europe.
- Promote peace, values and the well-being of all citizens of EU.
- Offer freedom, security and justice without internal borders
- Sustainable development based on balanced economic growth and price stability, a highly competitive market economy with full employment and social progress, and environmental protection
- Combat social exclusion and discrimination
- Promote scientific and technological progress
- Enhance economic, social and territorial cohesion and solidarity among EU countries
- Respect its rich cultural and linguistic diversity
- Establish an economic and monetary union whose currency is euro.
- The EU values are common to the EU countries in a society in which inclusion, tolerance, justice, solidarity and non-discrimination prevail.
- These values are an integral part of our European way of life:
- After World War II, European integration was seen as a cure to the excessive nationalism which had devastated the continent.
- In 1946 at the University of Zurich, Switzerland, Winston Churchill went further and advocated the emergence of a United States of Europe.
- In 1952, European Coal and Steel Community (ECSC)was founded under Treaty of Paris (1951) by 6 countries called Six (Belgium, France, Germany, Italy, Luxembourg and the Netherlands) to renounce part of their sovereignty by placing their coal and steel production in a common market, under it.
- European Court of Justice(called “Court of Justice of the European Communities” until 2009) was also established in 1952 under Paris Treaty.
- European Atomic Energy Community(EAEC or Euratom) is an international organisation established by the Euratom Treaty (1957) with the original purpose of creating a specialist market for nuclear power in Europe, by developing nuclear energy and distributing it to its member states while selling the surplus to non-member states.
- European Economic Community (EEC)was created by the Treaty of Rome (1957). The Community’s initial aim was to bring about economic integration, including a common market and customs union, among its founding members (Six).
- It ceased to exist by Lisbon Treaty-2007 and its activities were incorporated in EU.
- Merger Treaty (1965, Brussels)in which an agreement was reached to merge the three communities (ECSC, EAEC, and EEC) under a single set of institutions, creating the European Communities (ECs).
- Schengen Agreement (1985)paved the way for the creation of open borders without passport controls between most member states. It was effective in 1995.
- Single European Act (1986): enacted by the European Community that committed its member countries to a timetable for their economic merger and the establishment of a single European currency and common foreign and domestic policies.
- The Maastricht Treaty-1992(also called the Treaty on European Union) was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands to further European integration. It received a great push with the end of the Cold War.
- The EU and the European Central Bank (ECB)have struggled with high sovereign debt and collapsing growth in Portugal, Ireland, Greece and Spain since the global financial market collapse of 2008.
- Greece and Ireland received financial bailouts from the community in 2009, which were accompanied by fiscal austerity. Portugal followed in 2011, along with a second Greek bailout.
- It is a collective body that defines the European Union’s overall political direction and priorities.
- It comprises of the heads of state or government of the EU member states, along with the President of the European Council and the President of the European Commission.
- The High Representative of the Union for Foreign Affairs and Security Policy also takes part in its meetings.
- Established as an informal summit in 1975, the European Council was formalised as an institution in 2009 upon the entry into force of the Treaty of Lisbon.
- The decisions of its summits are adopted by consensus.
- It is the only parliamentary institution of the European Union (EU) that is directly elected by EU citizens aged 18 years or older.
- Together with the Council of the European Union(also known as the ‘Council’), it exercises the legislative function of the EU.
Council of the European Union
- It is part of the essentially bicameral EU legislature (the other legislative body being the European Parliament) and represents the executive governments (Minister) of the EU’s member states.
European Commission (EC)
- It is an executive body of the European Union,responsible for proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-day business of the EU.
European Court of Auditors (ECA)
- It investigates the proper management of finances within both the EU entities and EU funding provided to its member states.
The Court of Justice of the European Union (CJEU)
- It interprets EU law to make sure it is applied in the same way in all EU countries, and settles legal disputes between national governments and EU institutions.
The European Central Bank (ECB)
- It is the central bank for the euro and administers monetary policy within the Euro zone, which comprises 19 member states of the European Union.
- EU’s law and regulation is meant to create a cohesive economic entity of its countries, so that goods can flow freely across the borders of its member nations, without tariffs, with the ease of one currency, and the creation of one enlarged labour pool, which creates a more efficient distribution and use of labour.
- There is a pooling of financial resources so that member nations can be “bailed out” or lent money for investment.
- Union’s expectations in areas such as human rights and the environment have political implications for member countries. Union can exact a heavy political cost such as severe cutbacks and an austerity budget on its members as a condition of giving aid.
- This is a great experiment, really, in cooperation amongst nations, who wish to be economically unified, ceding as little political and national power as possible.
Challenges & Reforms
- It is no longer self-evident that all old member states will stay in the Union. The Treaty of Lisbon gave the members the right to leave the EU. The financial crisis has hit Greece so hard that many people have predicted for a long time that the country will exit from the Union.
- Layoffs, redundancies and migration of jobs to countries where labour is cheap affect the daily lives of European citizens. The EU is expected to find solutions to economic problems and employment.
- There is also demand for standard labour agreements on terms of employment and working conditions that would apply across Europe and even worldwide. As a member of the World Trade Organisation, the European Union is in a position to influence developments worldwide.
- EU is a global leader in the development of Key Enabling Technologies (KETs). However, EU’s record in translating this knowledge advantage into marketable products and services doesn’t match this. KETs-related manufacturing is decreasing in the EU and patents are increasingly being exploited outside the EU.
- Europe is experiencing a renaissance of national sovereignty supported by a nationalistic turn of public opinion and represented by parties on both ends of the political spectrum. Popular disaffection toward EU membership is fuelled by the contemporaneous occurrence of two shocks, the economic and the migration crises.
- USA, by withdrawing from the Paris climate change deal, by pulling out of the Joint Comprehensive Plan of Action (JCPOA) on Iran’s nuclear programme, and by attacking the integrity of the international trading system through the unilateral imposition of tariffs, has called into question Europeans’ formerly unshakeable faith in diplomacy as a way to resolve disagreements and to protect Europe.
- European leaders now fear that the transatlantic security guarantee will centre not on alliances and common interests but purchases of American technology and materiel.
- Like the United States, the EU has been forced to reconsider its relationship with a more assertive Russia with implications for European security and stability. The EU has sought to support Ukraine’s political transition, condemned Russia’s annexation of Crimea in March 2014, and strongly urged Russia to stop backing separatist forces in eastern Ukraine.
- EU has imposed too many rules on business and charged billions of pounds a year in membership fees for little in return.
- The EU added eight eastern European countries in 2004, triggering a wave of immigration that strained public services.
- In England and Wales, the share of foreign-born residents had swelled to 13.4 per cent of the population by 2011, roughly double the level in 1991.
- Brexit supporters wanted Britain to take back full control of its borders and reduce the number of people coming here to live and/or work.
- They argued that the EU is morphing into a super-state that increasingly impinges on national sovereignty. Britain has global clout without the bloc, they said and can negotiate better trade treaties on its own.
- Withdrawal from the EU is governed by Article 50 of the Treaty on European Union.
- A deal between UK & EU that gives it control over immigration and also preferential access to the EU’s tariff-free single market of 500 million people (UK), the economic backbone of the world’s largest trading bloc is rejected by Germany & other EU leaders.
Brexit and India:
Easing of Bilateral Relations in terms of trade and commerce: India sees the British exit as an opportunity to expand its trade and economic relations with the UK. This will pave a way for signing of bilateral free trade agreement between India and UK on the lines of Model Bilateral Agreements.
Brexit provides a fresh opportunity to India to strengthen its economic relationship with the UK through an India–UK trade and investment agreement.
UK and EU will compete for trading with India and enter into long term relationships with increased growth of trade.
Britain’s exit from the European Union might benefit students and professionals from India as after Brexit. After Brexit, Indian professionals will be competing on merit rather than on nationality, as the UK will no longer have to favour EU nationals.
Brexit and the uncertainty it produces would have many adverse impacts on the Indian businesses in the UK. UK’s exit would shut the direct access of these companies to the EU market.
EU & India
- The EU works closely with India to promote peace, create jobs, boost economic growth and enhance sustainable development across the country.
- In 1962, India was the first developing country to establish diplomatic relations with European community.
- EU-India Cooperation Agreement 1994 provides the legal framework for EU-India relations. India and the EU have been strategic partners since 2004. Since the Lisbon summit in 2000, India and EU holds regular summits.
- As India graduated from low to medium-income country (OECD 2014), the EU-India cooperation also evolved from a traditional financial assistance type towards a partnership with a focus on common priorities.
- At the 2017 EU-India Summit, leaders reiterated their intention to strengthen cooperation on the implementation of the 2030 Agenda for Sustainable Development and agreed to explore the continuation of the EU-India Development Dialogue.
- The EU is India’s largest trading partner, accounting for €85 billion (95 billion USD) worth of trade in goods in 2017 or 1% of total India trade, ahead of China (11.4%) and the USA (9.5%).
- EU is also the largest destination for Indian exports and a key source of investment and technologies. Major EU exports to India include engineering goods, gems and jewellery and chemical and allied products. The primary EU imports include textiles and clothing, chemical and allied products and engineering goods.
- EU is the second-largest investor in India. The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade, making the EU the first foreign investor in India.
- EU foreign direct investment stocks in India amounted to €73 billion in 2016, which is significant but way below EU foreign investment stocks in China (€178 billion).
- INDIA-EU Bilateral Trade and Investment Agreement (BTIA): It is a Free Trade Agreement between India and EU, which was initiated in 2007. Even after a decade of negotiations, India and EU have failed to resolve certain issues which have led to a deadlock.
- EU and India remain close partners in the G20 and have developed a regular macroeconomic dialogue to exchange experience on economic policies and structural reforms.
- Energy Cooperation: EU – India Clean Energy and Climate Partnership.
- Research and Development: India, participates in international ITER fusion project which aims to build and operate an experimental facility to demonstrate the scientific viability of fusion as a future sustainable energy source. India also participates in research and innovation funding programme ‘Horizon 2020’ wherein individual scientists can receive grants from the European Research Council (ERC) or the Marie Skłodowska-Curie Actions (MSCA)
- Environment and Water: The EU and India also cooperate closely on the Indian Clean Ganga initiative and deal with other water-related challenges in a coordinated manner.
- City to City Cooperation: There is city-to-city cooperation between European and Indian cities such as Mumbai, Pune and Chandigarh in a first phase and twelve more cities involved in the current phase. Now it is being formalized in an India-EU Partnership for Smart and Sustainable urbanization, which will support the Indian ‘Smart cities’ and ‘AMRUT’ initiatives to boost joint research and
- ICT Cooperation: The EU and India aim to link the ‘Digital Single Market’ with the ‘Digital India’. Apart from these “Start-up Europe India Network” initiative and EU-India Cyber Security Dialogue deserves special mention.
- Migration and mobility: The EU-India Common Agenda on Migration and Mobility (CAMM) is a fundamental cooperation agreement between India and EU. The CAMM addresses four priority areas in a balanced manner:
- Better organised regular migration and the fostering of well-managed mobility;
- Prevention of irregular migration and trafficking in human beings;
- Maximizing the development impact of migration and mobility; and
- The promotion of international protection.
- Concerns in relations
- Stalled EU-India BTIA: It is being negotiated since 2007. Major reasons for deadlock:
|EU’s demands||India’s demands|
|Duty cuts in automobiles||Ease norms on temporary movement of skilled workers|
|Strong intellectual property regime||Relaxation of Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) norms|
|Tax reduction on wines, spirits etc||Data secure’ status|
|Relaxation in India’s data localisation norms|
|Protection to all its items with Geographical Indication|
- Trade imbalance: India accounts for only 1.9% of EU total trade in goods in 2019, well behind China (13.8%). Trade imbalance is expected to further increase with ratification of the European Union Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement, which will make Indian exports less competitive.
- Human Rights concerns of EU: The European Parliament was critical of both the Indian government’s decision to scrap Jammu and Kashmir’s special status in 2019 and the Citizenship (Amendment) Act.
- Brexit: It is unclear how U.K.’s withdrawal from EU will affect India’s relation with EU as whole.
- India’s perception of EU: It views EU primarily as a trade bloc, preferring bilateral partnerships with Member States for all political and security matters. This is evident from lack of substantive agreements on matters such as regional security and connectivity.
- Evolution of EU has roots in looking for an integration of divided Europe because of excessive nationalism over a long period of time which also witnessed two world wars.
- It has played an important role in improving economic conditions and raising living standard of people in weaker members of group.