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The European Union (EU) formerly called the European Economic Community. Initiated as the Common Market in 158, the EU now comprises 15 western European nationsFrance, Germany, Italy, Belgium, the Netherlands, Luxemburg, Denmark, Ireland, United Kingdom, Greece, Spain, Portugal, Austria, Finland, and Sweden.
The EU has abolished tariffs and import quotas on nearly all products traded among the participating nations and established a common system of tariffs applicable to all goods received from nations outside the EU. It has also liberalized the movement of capital and labor within the EU and has created common policies in other economic matters of joint concern, such as agriculture, transportation, and business practices. The EU is now a strong trade block a group of countries having common identity, economic interests, and trade rules.
The EU integration has achieved for Europe what the U.S. constitutional prohibition on tariffs by individual states has achieved for the United States increased regional specialization, greater productivity, greater output, and faster economic growth. The free flow of goods and services has created large markets for EU industries. The resulting economies of large-scale production have enabled these industries to achieve much lower costs than they could have achieved in their small, single-nation markets.
One of the most significant recent accomplishments of the EU is the establishment of the so-called Euro Zone. In 000, 1 of the 15 EU members shared a common currencythe euro. Great Britain, Denmark, and Sweden have opted out of the common currency, at least for now.
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Economists expect the euro to raise the standard of living of the Euro Zone members over time. By ending the inconvenience and expense of exchanging currencies, the euro will enhance the free flow of goods, services, and resources among the Euro Zone members. It will also enable consumers and businesses to comparison shop for outputs and inputs, and this will increase competition, reduce prices, and lower costs.
In 1 Canada, Mexico, and the United States formed a major trade block. The North American Free Trade Agreement (NAFTA) established a free-trade zone that has about the same combined output as the EU but encompasses a much larger geographic area. NAFTA has greatly reduced tariffs and other trade barriers between Canada, Mexico, and the United States and will eliminate them entirely by 008.
By NAFTA employment has increased in the United States by more than 14 million workers sine it was founded, and the unemployment rate has sunk from 6. to 4. percent. Increased trade between Canada, Mexico, and the United States has enhanced the standard of living in all three countries.
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