State of the European Union
Despite its limitations, the European Union has been an outstanding success story and delivered exceptional value to its citizens and the world
By Duncan Levine
As the EU celebrates the 70th anniversary of the Schuman declaration, to learn what this milestone means to European leaders in Taiwan, read this op-ed by Filip Grzegorzewski, Head of the European Economic and this article comprising the views of various European Trade Office and Institute representatives.
On 9 May 1950 then French foreign minister Robert Schuman presented a declaration that proposed the creation of the European Coal and Steel Community (ECSC), whose members would pool coal and steel production. Within a year, on 18 April 1951, the six founding members (France, West Germany, Italy, the Netherlands, Belgium and Luxembourg) signed the Treaty of Paris, setting up the ECSC, a ground-breaking development that subsequently led the way to the same six signing the Treaties of Rome, on 25 March 1957, setting up the European Economic Community and the European Atomic Energy Community. The European Commission became the new high authority and the European Economic Community eventually evolved into the European Union which gradually grew to include 28 European member states (up until Brexit in 2020). Since 1985, Europe Day has been celebrated on 9 May every year.
Determined to prevent another world war, European governments concluded that pooling coal and steel production would, in the words of the declaration, make war between historic rivals France and Germany “not merely unthinkable, but materially impossible”. This view has been vindicated by history. Not only has the pooling of economic interests prevented a major war from breaking out, but the merging of economic interests has helped to raise standards of living across the EU and created a global economic superpower.
By most economic and social metrics, the European integration project that started in 1950 has been an outstanding success. From a devastated and war-ravaged continent in 1950, the EU has developed into the world’s largest single market economy and open society with high standards of living, healthcare, social security, the world’s most advanced standards for environmental and food safety and consumer protections. With a few exceptions, peace has been maintained. GDP has risen over 50-fold from just US$359 billion in 1960 to over US$19 trillion today, in the process building infrastructure, housing, and allowing the development of multiple successful industry sectors and globally-renowned corporations.
But, some cracks have begun to appear in the otherwise rosy picture, especially over the decade since the 2008-2009 global financial crisis.
The EU is facing a number of difficult challenges. The global financial crisis wiped out years of economic and social progress and exposed structural weaknesses in Europe's economy. The influx of refugees, especially in 2015 and 2016, has led to increased anxiety and occasional xenophobia within some EU member states and tensions between governments of member states. At the same time, Europe, like the rest of the world, has to deal with long-term challenges and disruptions associated with globalisation, automation, digitalisation, environmental degradation, pressure on resources and ageing populations. Given the confluence of these factors, large parts of Europe are suffering from low growth, high unemployment, rising deficits and high debts.
The first few months of 2020 have been an especially challenging time for the EU. With the departure of the United Kingdom from the EU on 31 January, the EU lost one of its biggest and most prominent members. Meanwhile the patchy response to the coronavirus pandemic is severely testing the solidarity of EU member states and their commitment to the union. All of these factors are eroding solidarity and providing fodder for malign forces who exacerbate perceptions that some Europeans are being forced to adopt policies they do not like, while others feel that they have to unfairly subsidize people with whom they have nothing in common.
It also does not help when actions at the member state level serve to undermine the authority or effectiveness of EU institutions. In a case in point, just last week, a ruling by Germany’s constitutional court questioning the legality of European monetary policy has been described as impinging on the independence of the European Central Bank (ECB) and imperilling the EU’s legal system. As argued in a Financial Times editorial “by ruling that the ECB’s earlier public sector purchase programme (PSPP) partly violates the German constitution, the court has made it all but inevitable that German critics of the ECB will challenge bond purchases made under the new pandemic initiative. Successful challenges would risk imposing serious constraints on the efforts of the ECB and Eurozone governments to manage the recovery phase of the crisis”.
Besides emboldening nationalists who think the EU has encroached too much on their sovereignty, the German court’s ruling adds fuel to the fire of criticism from those who say that the EU’s response should be much stronger and that its powers do not go far enough to create mutual prosperity and solidarity. Yanis Varoufakis, former Greek finance minister, has been a vocal critic of the EU’s handling of the global financial crisis and subsequent actions. He has argued that while struggling countries can now get large bailouts to deal with the coronavirus pandemic, there are strings attached and within a year or two, huge new austerity measures will be demanded to bring finances back into line, including the repayment of the funds spent on unemployment benefits. This risks a repeat of one of the greatest sources of tension following the global financial crisis, where actions at the central level were seen by many EU citizens as bailing out the banks, enriching the few while punishing ordinary people in only selected countries for the ineptitude, profligacy and sometimes outright corruption of minority elites.
This case illustrates one of the fundamental limitations of the European Union. It is only a confederation of sovereign member states. The way the union was set up gives only limited powers and responsibilities to the central level while member states are responsible for running their own countries. The EU has the power to make a law only if EU treaties give it that power. And the only areas that the EU is empowered to regulate are those that member countries cannot sufficiently regulate themselves.
EU laws on free movement cover things like product standards and composition, product labelling, rights of movement and residence of EU citizens, company law and banking regulation. The EU’s powers to regulate the single market are defined widely. They cover rules from consumer protection to animal welfare. Rules on agriculture provide for payments to farmers and also cover fisheries. Other EU rules implement environmental policy. They lay down minimum standards for the purity of drinking water and clean air. They also address global warming. However, crucial areas like national defence and health and social welfare are not decided by the EU.
Moreover, making a law at EU level usually starts with the commission making a proposal to the European Council. The European Council (comprised of an elected president, heads of member states and the European Commission) then decides on the content of the law (voting by qualified majority) in conjunction with the European Parliament. For most laws, both the council and the parliament have to agree for them to be passed.
Another major constraint of the EU is that the budget and resources of European institutions are very modest when compared to those of member states. In 2019 the EU had a total budget of €165.8 billion, representing only 1.02% of the EU’s gross national income. By comparison, the budget of just one member state, Germany, is almost double this amount at €362 billion. In terms of personnel, the entire European Commission employs a total of around 32,000 permanent and contract employees. By comparison, the German civil service alone employs 3.7 million. Moreover, while the European Commission is responsible for allocating the EU’s budget, 80% of funds are actually managed by national governments, which means that member states enjoy most of the benefits of the EU budget. Moreover, all spending is subject to strict and transparent controls.
These facts, which are clearly published on EU websites and should be common knowledge to EU citizens, are either ignored or deliberately distorted by malign actors. EU institutions and individuals working for them are frequently on the receiving end of harsh criticism. One of the fundamental pillars of the 2016 leave campaign in the UK’s referendum was that the UK would save £350 million a week if the UK left the EU. This blatant falsehood, along with other half-truths and misleading information was enough to convince a 52% majority of UK citizens participating in the referendum to vote to leave the EU.
In similar fashion, the “EU” has been blamed for the initial poor handling of the coronavirus pandemic, even though health care is the responsibility of individual member states and the EU has neither the budget nor resources to manage a pandemic.
Moreover, the criticism belies the fact that the EU did all it could within its limited powers to assist. From the very beginning of the pandemic, the European Commission introduced full flexibility for funds and government spending to fight the pandemic. The European Central Bank also reacted very quickly, providing over €750 billion for debt purchases where they are most needed. Then, EU finance ministers agreed on a €540 billion package to support member states, companies and workers. Most recently, EU leaders agreed to set up an unprecedented economic plan against the pandemic, which will be included in the EU’s long-term budget for the period 2021-2027. Then, a pledging conference on 4 May raised €7.4 billion for global health organisations to work together on vaccines, treatments and diagnostics.
In addition to that, contrary to the common perception of an absence of cooperation, there were countless cases of intra-EU solidarity: millions of masks were donated from France, Austria and others to Italy and Spain. Medical teams were sent to Italy from Poland and Romania, and patients from France were treated in Luxembourg, Czech Republic and elsewhere.
Yet, a consistent theme promoted in many media outlets was that the EU has failed in its response to the pandemic. As with the case of the Brexit campaign, the EU is a perfect scapegoat to deflect blame from national governments to the EU for their own shortcomings, such as dealing with the pandemic, as well as all manner of afflictions that are beyond the control of any government of supra-national institution, such as climate change, automation, digitalistation and ageing populations.
No institution is perfect, of course, and there will inevitably be instances of waste and inefficiency. But, looking at the big picture and a brief summary of the EU’s achievements over the past 70 years, the EU institutions have been extraordinarily productive and EU citizens have received remarkable value for money from the EU.
Anyone who has spent any time in Brussels examining the enormous complexity of the European project would be disingenuous to dismiss the remarkable achievements given the circumstances. Take a moment to consider the extraordinary diligence, patience, diplomatic and technical skills it must take EU officials to consult, negotiate and devise complex policies that are acceptable to 28 (and now 27) presidents and prime ministers in the council and members of multiple political parties in the European Parliament from separate member states, often with opposing or competing interests. Yet, just a view of the EU’s history for the first few months of this year, demonstrates how, on an almost daily basis, new policies and plans designed to benefit EU citizens are announced and implemented.
Critics of the EU also tend to gloss over the enormous benefits that the single market, trade agreements and related policies devised and implemented at the central EU level have given to the world. Taiwan is one of many countries that has benefitted enormously from and in parallel with Europe’s success. Bilateral trade and investment has continued to rise steadily over the years since Taiwan’s opening up to the world in the 1980s and much faster since Taiwan’s accession to the World Trade Organisation in 2002. US$55 billion has been invested by Europeans in Taiwan, creating thousands of jobs in Taiwan and Europe. Taiwanese have enjoyed high quality goods and services from Europe while Taiwanese companies have had access to the world’s largest market, creating a consistently rising trade surplus in Taiwan’s favour.
What has the EU done for you?
Quite a lot, it turns out. In the appendix at the end of this article is a brief summary of the some of the EU’s major initiatives and milestones over the years but here are some of the highlights:
Firstly, in recorded history, central and western Europe has never known a longer period without war, making the EU the most successful peace project in human history, for which it was awarded the Nobel Peace Prize in 2012. It is an all-too-often overlooked fact that no economic or social progress can happen in a state of war.
Secondly, the EU’s single market has developed into one of the world's most highly sophisticated and open marketplaces. Based on the EU’s four fundamental freedoms, which enable its citizens to live or work in any EU country, move their money, sell goods without restrictions and provide services on the same basis anywhere in the EU, the single market has served as an enormous driver of economic and social progress. This has been especially important for small countries, which are afforded influence in decision-making processes that they would otherwise be shut out of if they had to go it alone. Moreover, aligning norms and regulations has allowed the EU to evolve into a major setter of international standards, which has not only helped the companies within the single European market but also strengthened their global competitiveness.
For example, the EU has some of the world’s most advanced environmental, safety, health and food standards. This means that unscrupulous companies can't get away with selling contaminated food or polluting rivers and the countryside. And, by being a standard setter and large market, other countries have upgraded their own standards to be able to export goods to the EU, thereby making safer and better products for both the EU their own consumers.
The EU also has some of the world’s best consumer protections. Shoppers can now feel safe in the knowledge that they will get their money back if they return products. Travellers can buy train or plane tickets, knowing they can get a refund if their journey is delayed or cancelled.
In terms of human rights, the EU protects all minorities and vulnerable groups and insists on equal treatment for all. Thanks to the EU’s competition laws, users can make phone calls and use online services at no extra cost regardless of the location in the EU. Moreover, thanks to the EU’s data protection laws, the bar has been raised globally to protect personal data everywhere.
Despite everything the EU has done for its citizens and the world, they are seldom acknowledged, thanks to a sometimes hostile media and the EU’s own reticence. As a European official once put in during a meeting as part of the ECCT delegation’s annual Open Door Mission to Brussels, the European Commission tends to be modest and does not do a good job of communicating its great achievements.
While Europeans have every right to celebrate their remarkable achievements over the past 70 years, this is no time to be resting on their laurels. European leaders, to their credit, are fully aware of the scope of the challenges facing the EU from the current coronavirus pandemic and other geopolitical trends.
In her speech marking Europe Day this year, European Commission President Ursula von der Leyen invoked the spirit of Robert Schuman and his peers as “inventive, daring and pragmatic” by saying of the EU founders, “They showed that getting out of moments of crisis required new political thinking and breaking from the past”. She went on to describe the challenge very succinctly as follows: “First, we must do more to improve the lives of the poorest and most vulnerable in our societies. Too many in Europe were struggling to make ends meet before this crisis even began. Now millions more face an uncertain future, having lost their jobs or businesses. Young people and women are particularly affected and need concrete and determined support. Europe must be bold and do all that it takes to protect lives and livelihoods, particularly in the areas most affected by the crisis.”
She continued thus: “Our Union must also be healthy and sustainable. One lesson to learn from this crisis is the importance of listening to scientific advice and taking action before it is too late. We cannot put off addressing climate change and must build our recovery on the European Green Deal. And we must be closer to citizens, making our union more transparent and more democratic.. . We are at a time of temporary fragility and only a strong European Union can protect our common heritage and the economies of our member states.”
Leaders in the European Parliament have been even more specific about what needs to be done. In its latest progressive yearbook, the Group of the Progressive Alliance of Socialists & Democrats in the European Parliament (S&D), which is the largest group in the European Parliament, following the most recent 2019 elections, has stated that “the future of Europe must lie in the economic, social and ecological transformation of Europe without leaving anyone behind. We are leading the green transformation of Europe with social justice at its core: the ecological transformation has to guarantee social equality and create new opportunities, and not generate additional exclusion and divergences between regions and groups of people. The S&D Group will therefore push hard for implementation of the European Green Deal and will make sure that this is translated into a Climate Law proposal. The European Green Deal must be the industrial revolution that combines social rights, workers’ rights, sustainability and industrial competitiveness. Binding targets and measures should be in place, both at the EU and member state level. All sectors need to contribute. Fossil fuel subsidies should be phased out and stopped. Policies in favour of direct investments for cleaner technologies across the board and in all sectors should be implemented. We need at least 50% – and towards 55% – CO2 reduction by 2030 to be able to reach the target of carbon neutrality by 2050.”
The S&D’s progressive yearbook continues as follows: “Ensuring a just transition to a sustainable economic model is crucial for us, and we want to make sure that new indicators according to the SDGs [Sustainable Development Goals] are added to the European semester so that not only is macroeconomic growth taken into consideration, but also people’s well-being and a respect for the environment.. . Our political family must ensure that key economic, social and ecological targets have the same importance in the policy process. To ensure that the Green Deal becomes real and not just words on paper, we need a robust Sustainable Investment Plan. This plan will promote sustainable investment and quality job creation and a Just Transition Fund.”
Of course, all this sounds very good in theory. Leaders in the commission and parliament will be judged on how quickly and effectively they can deliver. And, in making their judgements, European citizens would do well to remember the legal and resource constraints placed upon European institutions by their own national governments and that progress depends on both the actions of their own national governments and how well they coordinate these actions with the European Commission, parliament and other European institutions.
Appendix: Major EU initiatives and milestones
The following is by no means an exhaustive list. It simply offers some of the highlights of initiatives and milestones achieved in the EU over the past 70 years.
In 1962, the EU started its “common agricultural policy” giving member countries joint control over food production and ensuring farmers are paid the same price for their produce. This enabled the EU to grow enough food for its needs and for farmers to earn well and to produce products for export to the rest of the world.
In 1968, the six member states removed customs duties on goods imported from one other, allowing free cross-border trade for the first time. They also applied the same duties on their imports from outside countries. The world’s biggest trading group was born and trade, both internally and externally began to grows rapidly.
Denmark, Ireland and the United Kingdom join the European Union on 1 January 1973, raising the number of member states to nine. In 1974, EU leaders set up the European Regional Development Fund. Its purpose was to transfer money from rich to poor regions to improve roads and communications, attract investment and create jobs. This type of activity later came to account for one third of all EU spending and was responsible for putting in place vital infrastructure needed to keep the internal market functioning smoothly.
In 1981, Greece became the 10th member of the EU and Spain and Portugal followed five years later. In 1986 the Single European Act was signed. This treaty provided the basis for a vast six-year programme aimed at sorting out the problems with the free-flow of trade across EU borders and thus created the single market.
In 1987, the EU launched the ‘Erasmus’ programme to fund university students wishing to study for up to a year in another European country. More than two million young people have benefited from this and similar EU schemes since then.
In 1992, the Treaty on European Union was signed in Maastricht in the Netherlands. It was a major EU milestone, setting clear rules for the future single currency as well as for foreign and security policy and closer cooperation in justice and home affairs. Under the treaty, the ‘European Union’ was officially created.
In 1993, the single market was formally established embedding the four freedoms of movement of goods, services, people and money. More than 200 laws have been agreed since 1986 covering tax policy, business regulations, professional qualifications and other barriers to open frontiers.
In 1995 Austria, Finland and Sweden joined the EU, bringing the total number of EU members to 15, and covering almost the whole of western Europe.
In 1995, the Schengen Agreement took effect in seven countries - Belgium, France, Germany, Luxembourg, the Netherlands, Portugal and Spain, allowing travellers of any nationality to travel between all these countries with no passport control at the frontiers. Other countries have since joined the passport-free Schengen area.
In 1997, the Treaty of Amsterdam was signed. Building on the achievements of the Maastricht Treaty, it laid down plans to reform EU institutions, to give Europe a stronger voice in the world and to devote more resources to employment and the rights of citizens.
In 1999, the euro is introduced in 11 countries initially (and joined by Greece in 2001) for commercial and financial transactions only. Notes and coins were introduced in 2002.
In 2003, the European Union implemented a food safety policy aiming at protecting consumers, while guaranteeing the smooth operation of the single market. The policy centres on the concept of traceability both of inputs and of outputs, such as primary production, processing, storage, transport and retail sales. Since then the EU has built an extensive body of EU-wide law covering the entire food production and processing chain within the EU, as well as imported and exported goods. EU countries have since implemented these harmonised standards and established controls to enforce them. The EU audits the application and effectiveness of the laws and controls, and also provides training to the responsible EU and international authorities. The EU has agreed standards to ensure food hygiene, animal health and welfare, and plant health and to control contamination from external substances, such as pesticides.
In 2004, eight countries of central and Eastern Europe - the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia - joined the EU.
In 2005, the Kyoto Protocol, an international treaty to limit global warming and cut emissions of greenhouse gases, came into force. The EU has consistently taken the lead in efforts to reduce the impact of climate change.
In 2007 two more countries from Eastern Europe - Bulgaria and Romania - joined the EU, bringing the number of Member States to 27. In the same year, 27 EU countries signed the Treaty of Lisbon, which amended the previous treaties. It was designed to make the EU more democratic, efficient and transparent, and thereby able to tackle global challenges such as climate change, security and sustainable development. The Treaty of Lisbon was ratified by all EU countries before entering into force on 1 December 2009.
Following the economic crisis that began in 2008, several countries encountered problems with public finances. 16 euro area countries backed a plan to help them deal with their deficits.
In 2011 the launch of the first two Galileo satellites brought the EU one step closer to having its own satellite navigation system.
In 2012, the European Citizens’ Initiative became operational, giving citizens the direct possibility to propose the creation of a law to the European Commission.
In 2012 the EU was awarded the Nobel Peace Prize "for over six decades of having contributed to the advancement of peace and reconciliation, democracy and human rights in Europe".
In 2013, the phasing-out period for testing cosmetic products on animals ended, meaning that cosmetics tested on animals may no longer be marketed in the EU.
In 2013 Croatia joined the EU, becoming its 28th member.
In 2014 EU leaders pledged €1 billion towards fighting the spread of the Ebola virus in West Africa, particularly in Guinea, Sierra Leone and Liberia. It was the largest and most complex outbreak since Ebola was first observed in 1976. By the end of 2015, the virus was virtually eradicated in these countries.
In November 2014, the commission announced a €315 billion investment plan with a view to creating up to 1.3 million new jobs.
By the end of 2015, around one million asylum seekers had arrived in Europe during the year, many fleeing civil war in Syria and in need of international protection. EU leaders stepped up efforts to strengthen external border controls and reduce the number of asylum seekers by cooperating with neighbouring states such as Turkey.
In 2015 at a climate conference in Paris, 195 countries agree to limit the global temperature increase to less than 2°C.
In 2016, the European Commission announced proposals to tackle corporate tax avoidance by large companies in all 28 EU countries. The Anti-Tax Avoidance Package aims to hamper aggressive tax planning, increase tax transparency and secure a level playing field for all businesses in the EU member states. In the same year, the European Commission presented its energy security package. It contains proposals aimed at ensuring that consumers in the EU are provided with sustainable, competitive and affordable energy, requiring a fundamental transition of the energy landscape.
In 2016 EU ministers approved the ratification by the European Union of the UN 'Paris Agreement' on climate change, agreed in December 2015. This allowed the agreement to enter into force.
In 2017 the European Commission secured a ten-year pledge to save Mediterranean fish stocks and protect the region's ecological and economic wealth. The 'Malta MedFish4Ever' Declaration set out a detailed work programme for the next 10 years.
In June of the same year, roaming charges for using mobile phones abroad come to an end. As of this date, citizens who travel within the EU are able to call, text and connect to the internet on their mobile devices at the same price as they pay at home. Thanks to this and EU competition laws, EU citizens have some of the world’s cheapest internet and other communication costs.
In 2018, new rules to prevent tax evasion and money laundering entered into force. They oblige Member States to give tax authorities access to data collected under anti-money laundering legislation.
In the same year, The European Commission presented the first-ever Europe-wide strategy on plastics as part of the transition towards a more circular economy.
In March 2018, the automatic emergency call system, eCall, became mandatory throughout the EU for new cars, with the aim of saving more lives on the road. The system automatically dials 112 - Europe's single emergency number - in the event of a serious accident.
In May 2018, the EU introduced major revisions to EU data protection privacy rules, designed to make sure that the personal information of individuals in the EU is protected no matter where it is sent, processed or stored, even outside the EU. This ground-breaking development led countries globally to upgrade their rules in line with those of the EU.
Also in that month, with the increasing amount of harmful plastic litter in oceans and seas, the European Commission proposed new EU-wide rules to target the 10 single-use plastic products most often found on Europe's beaches and seas, as well as lost and abandoned fishing gear.
In June 2018, the commission proposed the first-ever EU initiative to address the decline of wild pollinating insects. It is part of the EU’s efforts to halt the loss of biodiversity and degradation of ecosystem services by 2020 and contribute towards commitments made under the UN Sustainable Development Goals.
In July 2018, new energy performance rules entered into force with huge potential for efficiency gains in the EU building sector, the largest single energy consumer in Europe. In December 2018, new rules introduced allowed European consumers to shop online in the EU without being blocked or re-routed. The legislation was part of a series of new rules on e-commerce aimed at boosting cross-border online sales in the EU, for the benefit of both consumers and online traders.
In April 2019, the commission adopted a new regulation to set a maximum limit on the use of industrially produced trans-fats in foods in the EU. The measure aims to protect consumers' health and provide Europeans with healthier food options. The maximum limit of two grams of industrially produced trans-fats per 100 grams of fat will apply from 2 April 2021.
In November 2019 as part of the New Deal for Consumers, the council adopted new rules that modernised EU law on consumer protection and make consumers' rights easier to enforce. Member states will have 24 months to adopt the measures necessary to implement the new rules and these measures will start to apply six months later.
In the same month, the European Commission approved the first EU vaccine against Ebola. The EU had financially supported Ebola research and vaccine development since the outbreak of the deadly disease in West Africa in 2014.
Just days after taking office, the von der Leyen commission presented its flagship policy, the European Green Deal, which set out how to make Europe the world’s first climate neutral continent by 2050. Supported by investments in green technologies, sustainable solutions and new businesses, the European Green Deal will also be Europe’s new growth strategy. As well as creating jobs and improving people’s quality of life, the policy aims to ensure a just and inclusive transition for all through specific support for those regions that rely heavily on very carbon intensive activities.