EMU by leader6


									Singly market
               -Strategy to promote the SM were flawed
               - very difficult to harmonize standards for 25 member states
               - harmonization requires unanimity
               - mutual recognition- free trade principle…you don’t need to harmonize
               - political circumstances
                        1.) unanimity
                        2.) British budget “money back”
                        3.) reform institutions

               -   finally dealt with issues in 1980’s
               -   Court of Justice pushing form and integration
               -   Reform Treaty of Rome (1986)
                       o Made Single European Act
                                 Allowed institutions to have legal treaty base to work in
                                    new areas
               -   Gave Britain their money back

       Convergences of National Preferences
             - previous different strategies among member states
             - in 1981 French elected socialist President
             - Investment flew out of France
             - 1983- socialist considered good capitalist
             - The only way to modernize and improve French economy was to see it
                 as an EU institution
             - 1983- British elect Thatcher-neo-liberalist
             - Member states promoting free trade and labor markets
             - Declining competitiveness vis-à-vis US/Japan
             - Case Law

       1985- Watershed Year
              Delors-comes to office (Commission Pres.)
              White Paper-completing the SM
              Mutual recognition
              Timetable- deadline 1992

       Jurist Lord Cochfuld-
               - put down the easy things first
               - understood principles
                      o 1. remove physical barriers of trade, technical and fiscal
                      o 2. physical barriers- borderless Europe
                      o 3. technical barriers for business, people
                                Meant standard elimination
                                Harmonize/mutual recognition
                          4. fiscal barriers capital mobility
                                   Services, banking, insurance
Explaining the process of integration
       Demand for regulation
               - business ----supply/demand (similar to harmonization)
               - regulatory state
               - intergovernmental bargaining LCD

Flanking Policies
               - business began to get engage b/c flanking policies began
               - EU began industrial planning/policies
               - Old sectors (shipbuilding, steel, textiles) are where flanking policies
               - Then moved to IT (Strategic techn)
               - 1982 – Euro. Roundtable
                      o Mobilized and put forward some suggestions (promoting SM)
                             1. fiscal, political obstacles prevented transnational
                             2.
                             3.highly unfavorable

Single Market- characterized by deep integration
              - both overseas and within Europe
              - market regulation vs. competition

Competition policy- what is scope?
             - what is rational?
             - who administers policy?
             - Highly salient issue in international trade issues
             - Ex. cartels, monopolies, state aids
             - Central element in government policy towards industry and strive for
             - In EU- aimed at promoting general objectives of single market and ensure
                 proper management of single market. Based on economic and social
             - In US- has had policy for long time, with many acts. Highly federalized
                 policy with deep roots. Based on economic criteria only.
             - Promote trade liberalization through targeting subsidies and state aids.
EU (market) Law- four fold
             - 1.) anti-trust enforcement
                    o Abuse of market domination
                    o Provision against cartels
             - 2.) public undertakings
                    o Could still allow some government monopolies in some cases
                             National airlines
             - 3.) Mergers/acquisitions (strongest area)
                    o Received in 1989
                    o Right to look at cross border merger and determine whether it’s
                    o Merger review
             - 4.) State aids (weakest area)
                    o Restriction on public subsidies for private and public firms and
                        state aids

European Community has emerged as federal leader of Competition policy
Competition policy shaped by two:
              - DG competition
                      attracts lawyers
              - Court

Two Important Cases (Law)
            - 1973- Continental Can
                   o Two firms Boeing and McDonald Douglas that were merging as
                       monopolies was brought to Court of Justice, so merger was
                   o Enhanced Boeings Shares
                            Would control 70% of market
                            Allow Boeing into aviation/space aircraft
                            Had contract for 20 year global domination
                                  Would cut out AirBus for 20 years

             -   1987- Philip Morris

Three levels of Competition Policy
        1.) National
        2.) EU
        3.) International

Three possible outcomes for merging firms
       1.) No problem
       2.) Can merge, but with restrictions
       3.) No merger possible under EU law
Economic and Monetary Union (EMU)
       Began life in era of fixed exchange rate
       Late 1960’s Bretton Woods system collapse (1971) and Europe looks for alternative
       No reference to the Treaty of Rome
       First considered in 1970 with the Werner Plan
       Werner Report-
               -Recommended a three stage process to promote monetary integration
               -Wanted to: increase economic policy coordination
                       -Narrow exchange rate fluctuations among themselves
                       -Community to have competence over exchange/interest rates
                       -Create a community system of central banks
               -Wanted free movement of capital
               -Locking of exchange rates (together)
               -Replacement of national currencies with a common European currency
               -Came along during a time of Economic recession and revitalizing integration
               -Ultimately not possible at the time
                       Too far too soon (economic integration)
       1972- Europe creates the ‘snake in the tunnel’
               -Prevent currency fluctuation with the floating of the dollar

European Monetary System-
      Created to establish exchange rates
      Cooperation between Euro Commission and Member states to manage exchange
      Bilateral rates tying a member states currency to the ECU (European Currency Unit)
      and tying the ECU’s to each other

1989- Delors
       Three Stages towards EMU
              Stage 1        1.) Liberalize Capital Markets
              Stage 1        2.) Fully integrate financial markets
              Stage 2        3.) Total and irreversible convertibility of currencies
              Stage 2        4.) Irrevocably fix exchange rates
              Stage 3        5.) Possibly replace national currencies with a single currency
              Stage 3        6.) Independent central bank coordinating monetary policy

Lisbon Agenda
        Designed by EU leaders in 2000
        Addresses employment rate, economic policies (innovation), businesses (small
business growth and competition in sectors i.e. telecommunications), and environment
(reduce greenhouse gas emissions)
Open Method of Coordination
             Every year, EU adopts new employment policy guidelines
             Details and carry out are left to individual member states
                     States annually justify/report on policy guidelines
             Purpose of the OMC
                     Strategic approach
                     Mainstreaming the objective of Social Inclusion
                     Mobilization of actors
                     Mutual education
      See handout…

EU is lacking behind increasing growth/competitiveness

      Raise economic performance
      Lower prices
      Drive for innovation

European Competitiveness and Economic Reform
Struggles- different models of welfare
         -different models of capitalism
         -how to balance efficiency and growth vs. social solidarity/cohesion

Old model- EU social policy
New Model- EES employment strategy (OMC)

Reconfiguring wealth and welfare within the new community
Struggle to develop effective and legitimate government arrangements
Need to coordinate reforms along similar policy domains
        Involves public and private actors

EU Social Policy areas
1.) Social Dialogue
        How to address differences in political policies with a communal market
2.) Social Charter
        Work place conditions; Market conditions; Co-determination n the workplace
3.) Gender rights
        ECJ used; equity; maternity leave
4.) Social and Economic cohesion
        Market correcting policy- poor countries affected most by Single Market

EU Welfare policy is different from national/social welfare policy
EU social policy has a different characteristic to the national context
       Very neo-voluntarist

Adjustment problems have different characteristics
       Different welfare regimes
       Different types of activities due to different models

European employment strategy
      Soft Law
      “Flexicurity”- flexibility and security in terms of labor market
                       Job security with flexible labor market
      Promote employability policies
               Job creation
      Did not address fiscal and/or wage policy; just job creation
      Effort to balance/modernize Europe’s economy yet promote solidarity, so wasn’t
      Tried to avoid social dependency on welfare

Models of Governance
First model
Harmonization/centralization-old model
Single market 60’ 70’s

Second model
Regulatory competition, mutual recognition

Third model
How do we recognize both diversity and subsidiary?

No more about economic market integration, now focused more on externalities of the
market. Security, social policy, etc.

Barcelona Process/Near Neighborhood Policy

Three pillars of EU accession
1. Alignment
2. Conditionality
3. Technical/financial assistance

Using same rules, stipulations but don’t have same goal
Focused on democracy – democratic consolidation (do they have real party competition. Is
there party opposition.) many hybrid regimes, not quite real democracy
Asymmetric bargaining, asymmetric relationship (EU not fair with restrictions, trade
England, Ireland, Poland - only nations allowing transit workers form 10 Barcelona
members. Foreign professionals working abroad

Normative Power- in terms of enlargement, we focus on IMF and WB, but there needs to
differentiation because enlargement revolves around political conditionality, not solely
economic aid

EU used different discourse for different states (1990’s)
      Telling different countries different things
      Poland/Hungary- association
      Other applicants- bilateral trade partners

Copenhagen Criteria-Three lots of enlargements, but only in 1993 did they come up with
actual membership criteria
        Four conditions
        -Respect for Human Rights
        -Rule of Law
        -Liberal Democracy
        -Functioning Economy
Have added other stipulations/extra conditions
        -Added other conditions for Turkey because of past accession agreements with
        Central and Eastern states haven’t truly honored EU guidelines
        -Central and Eastern states have met standards but don’t implement
                -were lucky because they became aligned before there was added stipulation

5 Norms which affect membership
Issue of Peace
Fundamental Freedoms
Rule of Law
Human Rights

Almost all Turkish governments identify themselves with Europe
Have Western orientation
Adoption of EU norms is easier to accept/adapt

Kemalism- built on a notion of national identity that doesn’t recognize ethnic minorities
            - hard time accepting equal rights mandate
            - no recognition of a Kurdish minority within Turkey
            - Turkey norms/perceptions are in contrast to EU norms/perceptions
            - Same in France (but separation of church and state)

Oscalan-           was up for execution for possible terrorist acts
               -     abolishment of the Death penalty by EU mandates
               -     example of Copenhagen + - added pressure to become EU member

Turkey- never faulted in joining organizations (WTO, NATO, etc.)
       -consider themselves Western
       -last project to finish is European Integration
                -separates them from all other Balkan states
                -perceptions outside is very supportive, yet still not accepted all EU norms
                  over own domestic norms due to interpretation

French/Dutch- two primary fighters against European Integration
             - fearful of social dumping
             - cheap labor
             - all focused on western Europe
             - not realizing east Europe has been integrating over the past decade
             - eastern Europe has received Euro 150 Billion in aid
             - trade barriers lifted as well in some areas
             - New Europe has same concerns of old Europe
                     o Polish plumbers
                     o Free transfer of labor
                     o Unemployment is higher in Eastern Europe
                               10-15% as compared to 7%
                               Lower wage costs
                               Productivity is only 30% of eastern Europe
       Fears of globalization and widening Europe
       Prospects look much different in Eastern Europe as compared to established
       Western Europe

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