European Union - Regional Paper

Essay by salthurmondUniversity, Bachelor'sA-, April 2007

download word file, 8 pages 5.0

Zooming in on the Economic Developments in the European UnionIn the globalizing world, it is but logical that most trade groups contain countries in the same area of the world to offer trade agreements to obtain mutual benefits. Neighboring countries tend to ally for several reasons:•The distances that goods need to travel between such countries is short.

•Consumers' tastes are likely to be similar, and distribution channels can be easily established in adjacent countries.

•Neighboring countries may have a common history and interests, and they may be more willing to coordinate their policies (Balassa, 1961).

This is why in the enlargement with countries from Central and Eastern Europe has become an important factor in the strengthening the European Union (EU). The general view is that this enlargement will substantially affect the functioning of the European Union. However, the institutional structure of the European Union, which was initially designed for a union of only six member states, might not be suitable for a European Union of 27 or more member states.

The problems associated with enlargement and their possible solutions have been discussed at two intergovernmental conferences (in 1996-1997 and in 2000) leading to treaty reforms made at Amsterdam and Nice (Steunenberg, 2002).

Often dubbed as the largest and most comprehensive of the regional economic groups, the European Union began as a customs union, but the formation of the European Parliament and the establishment of a common currency, the euro, make the EU the most ambitious of all the regional trade groups. Although the EU remains the dominant trading bloc in Europe, the European Free Trade Association and Central European Free Trade Association are other regional trading blocs that promote free trade.

The European Union has been moving toward a single market since the passage of the Single European Act of...