THE EU

International Business and the EU



International Business and the EU

Task 1:

At this time, the EU is neither a nation (as the United States) nor an international organization (like the United Nations), but a framework for economic and political cooperation. Within the EU are several institutions that represent the whole union on matters of mutual concern. To varying degrees these institutions can act on their own, with the authority of the member states behind them. As the EU expands, many believe it needs a stronger infrastructure to meet the demands of a strong federation. For some members, the benefits of granting more power to the union are appealing. Security, trade, and diplomacy could be strengthened. For others, the idea of granting more sovereignty to the union causes great concern about reducing the sovereignty of the individual nations. (Wallace 2005, 41)

A single European market is a market created by the removal of internal trade barriers within the European Community during the 1980s. The Single European Act was introduced in 1985 to help speed up the process of implementing a single European market. (Dalton 2003, 82)

International trade is any legal exchange of goods and services between countries. When a business in one country exports goods or services to consumers in another country, it is called international trade. International trade also takes place when consumers in one country import goods and services from a foreign producer. International trade is important because it allows national markets to provide a diversity of goods and services to their consumers that they would be unable to provide if they were limited to the production of goods and services within their borders (Vaubel 2004, 63). The result of international trade is that almost any type of good is available on the international market, from resources such as oil, water, and steel to necessities such as food, clothing, and building materials to luxury goods such as diamonds, designer clothing, and limousines. Many services are traded internationally, such as legal, accounting, advertising, banking, and tourism services. Another notable result of international trade is that the more manufacturers that participate in an industry, the greater the competition between manufacturers becomes. Greater competition results in more competitive prices, which means that consumers have access to a number of discounted products. (Archer 2002, 12-15)

Things began to change in 1987 with the adoption of the Single European Act (SEA). The plan was that all barriers to trade and free movement between the member states would be eliminated by 1992. This move was primarily dictated by the economic logic of fulfilling the original goal of the EEC to remove customs barriers. While this had largely been accomplished by the 1980s the effect was not entirely satisfactory, as there were still significant barriers to the movement of services and, perhaps most controversially, the movement of people from one country to another. As the economies of Europe became increasingly oriented toward services, these issues threatened the achievements of the customs ...