European Union Exam 3 Study Guide The following is based off the questions in Professor Ehrlich s Guide He also stated to focus on questions 2 5 which will make up the bulk of the exam 1 1 The following policies are discussed below Creation and regulation of the Single Market Budgetary Politics including CAP and cohesion Monetary policy Justice and Home Affairs International Economic Policy Common Foreign and Security Policy 2 The Single Market Single Market was created due to intense international competition in the early 1980s EU leaders committed themselves in the Single European Act to completing the single market by the target date of 1992 There were 300 necessary measures on the white paper legislation to complete the single market major barriers grouped into 3 categories physical technical and fiscal o Physical barriers customs and immigration posts at border crossings between member states were the most tangible obstacles to the single market It restricted the movement of goods and people across borders The commission overcame this by to eliminate in their entirety internal frontier barriers and controls by 1992 o Technical Barriers used this term as a catchall proposals under this heading covered product standards testing and certification movement of capital public procurement free movement of labor and the professions free movement of financial services transport new technologies company law intellectual property and company taxation It was the largest of the 300 white paper measures Overcame barriers in this field by establishing mutual recognition as a basic principle restricting harmonization to technical and health and safety standards They also abolished controls on free flow of capital between member states and rules governing cross border company activities were harmonized and common rules on the protection of intellectual property were agreed o Fiscal Barriers to remove fiscal barriers the Commission proposed the harmonization of the value added tax VAT and excise duties such as alcohol and tobacco A standard minimum VAT of 15 in each member state the abolition of luxury tax and rules where VAT should be paid How is the single market regulated the same rate o Tax VAT is to be paid in the country of destination Excise taxes were also harmonized at o Environmental introduced QMV in the council and co decision with the EP on environmental legislation as well as the principle of sustainable development Allowing member states to apply higher regulations if desired Required EU to have a common policy o Competition was regulated in 3 separate strands Antitrust regulation treaty that outlaws a variety of agreements between companies that would restrict competition like cartels and price fixing Regulation of state aids the treaty outlaws subsidies to industry that threaten competition and trade between member states unless it promotes the intresst of the EU Merger control delegating substantive powers to the commission o Social regulations A general objective of promoting social progress and a high level of employment Closer cooperation in the improvement of living and working conditions Member states ensure equal pay for men and women European social fund to help occupational and geographical mobility Free movement of workers with rights to residence social security and non discrimination in employment 3 The EU Budget How is the EU budget set detail o The annual budgetary procedure is as follows also look on pg 224 in HIX for more The commission proposes an annual budget within the guidelines of the multiannual financial framework Council adopts or amends budget by QMV and forward to EP Unless an absolute majority of MEPs amends budget Council version is is adopted In the conciliation committee a simple majority in the parliament and QMV in the council is required to adopt the budget If there is no agreement on stage then the budget fails and the commission must submit a new proposal o Main sources of revenue Agricultural levies under the common agricultural policy CAP these are charges on imports of agricultural products from non EU countries o Main Expenditures Customs Duties common customs tariffs and other duties are levied on imports from non EU countries Value added tax VAT a harmonized rate is applied in all member states and this should not exceed 1 of the EU GNP GNP based own resource based on the GNP of the member states this covers the difference between planned expenditures and the amount yielded from the other three resources CAP largest item of EU expenditure Cohesion central aim is to promote economic and social cohesion which is to reduce disparities between regions and social groups in the EU Was to end ever larger proportion of the EU budget has been transferred to poorer and less developed regions Cohesion funds go to the 4 poor countries in W Europe Ireland Greece Spain and Portugal and also poor regions of rich countries S Italy Scotland N Ireland and E Germany And Eastern Europe R D and Education created the ESPIRIT program for research and development Foreign aid and international activities The EU s more proactive foreign and security policy enables it to carry out crisis management and peacekeeping missions in Europe and far beyond Administration Bureaucracy The EU s administrative expenses amount to less than 6 of the total EU budget 4 CAP Why it operates o Single Market agricultural produce should be able to move freely throughout the EU o Community preference priority should be given to produce originating within the EU over that of other countries o Financial solidarity the cost of the policy should be borne by the common EU budget rather than by individual member states o Over all main objectives Increase agricultural productivity Ensure a fair standard of living for farmers Stabilize agricultural markets Guarantees regular supplies of food Main problems with the CAP Ensure reasonable prices for consumers o Guaranteed prices encouraged overproduction and production grew faster than demand resulting in wine lakes and butter mountains o These surpluses had to be stored thus imposing another cost on the CAP budget o Environmental destruction resulted from over intensive farming and excessive use of herbicides pesticides and artificial fertilizers o Bulk of revenues went to larger farmers but it was smaller farmers who were in need of o Import quotas and levies created numerous trade disputes and prevented global free support trade in