The European Union is the formation of countries having similar geographic locations along with similar economic and political goals. This formation occupies its strong positions in the world political arena for decades. For this reason, its structure and its state concepts present an interesting area for research. In the following report, the European Union (EU) and the United States (the US) will be compared to conclude the main concepts of the EU formation. Overall, the evaluation of the facts shows that the EU is a unique union of independent countries having not many similarities with the other political formations in the world including the US.
The EU is not a nation or a state, it is a political and economic union or confederation of twenty-seven independent countries situated in Europe. This form of union is unique and has no other precedents in the history of humanity. According to The Columbia Encyclopedia (2009), the European Union is “an economic and political confederation of European nations and other organizations (with the same member nations) that are responsible for a common foreign and security policy and cooperation on justice and home affairs”. The following countries are the members of the union: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Great Britain, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. The member states of the EU perceive themselves as sovereign and independent countries united through confederation bonds and regulations. The citizens of member states view the EU in a very different way. In particular, the population of poorer countries such as Greece, Portugal, Bulgaria, Romania, Poland, Estonia, Latvia, and Lithuania expresses contentment and joy on the reason of their being a part of the EU as this provides better economic opportunities for these countries. However, the citizens of Great Britain, Germany, and the Scandinavian countries are less enthusiastic at the current period. Their negative position is explained by the fact that they have to “feed” the other countries of the EU being the major sources of financial help for the countries of the Eurozone which appeared in a difficult economic situation. In 2011, when the economic crisis badly affected Greece to the extent that the country was about to announce default, the citizens of Germany and the Scandinavian countries started lively discussions concerning their exit from the EU as they believed that such a decision will secure a better life for them in future. Below, the table is shown with the results of one of the latest surveys among the citizens of the EU concerning their trust in the other countries belonging to the union. The results shown in the table prove that Europeans do not contend with the reason for the presence of certain courtiers in the union. In addition, the worries of many nations are connected to their goals of maintaining their cultural peculiarities and local languages which are threatened, as they believe, on the reason of global European culture.
The government of the EU is very different from the one in the US; however, there still exist some similarities. Discussing the differences, it should be stated that the EU is a different form of a state organization that has many reflections on its government organization (Burgess, 2000). The US, on the contrary, is a federation with traditional governmental bodies for this form of country organization. As a result, the EU government consists of unique parts including the European Parliament (which is the only similarity in the formation of the governments of the two countries), the European Council, the European Commission, and Directives.
The picture shown below illustrates the peculiarities of the US government formation. It shows that its main parts are different from the EU ones. They are the Senate, the President, and the Vice President, and the Supreme Court.
With regards to the similarities, it appears that they are not many: both of the formations have their parliaments and principal representatives such as the US President and the President of the European Council.
In the EU, identity plays its due part, but it is not as significant as in the US. Race, ethnicity, gender, and sexual identification are viewed differently in the EU. They do not cause so many hardships and conflicts as it happens in the US. Of course, from time to time some difficulties occur. They are mainly caused by the constant waves of immigration of Arabs and Africans to such countries as France, Germany, and Great Britain. The local population becomes indignant about the reason for occupying their working places and other social positions by the immigrants. In this vein, several cruel conflicts occurred in France and Great Britain in 2010 and 2011. However, evaluating the general situation, it should be stated that the EU has fewer problems in this area than the US which is explained by the traditional mentality and way of thinking European people possess. They are accustomed to showing tolerance to the representatives of the most varied races and ethnicities. In addition, Europe is much more emancipated. The cases of gender discrimination occur here on a more random basis than in the US. Even the heads of many European countries including Germany and Latvia are women.
Addressing the economic relationship between member states in the EU and the EU, it should be stated that they are rather transparent. First of all, every country of the EU makes its contribution to the budget of the union. These funds are spent on varied economical programs including providing economical help for the needy members of the union. One of the very important organs exercising control in the area of financial distribution is the Joint Commission. The table below shows particular ways and mechanisms it uses for this purpose. The situation with the EU economy is somehow similar to the situation with the US economy. In the US, funds are also collected from the local budgets of states to the federal budget. Then they are allocated in accordance to the needs of all the states and the country as a whole including defense and environmental protection.
There are also differences in the economical systems of the two-state formations, as the EU is a confederation of the independent countries, and it has no purpose of solving economic issues of any particular country whereas the US is to accomplish both local and federal economic tasks.
In conclusion, the EU and the US are different state formations which can be seen from the detailed discussion of their political, economic, and social peculiarities. The EU is a unique confederation union never existed before during the history of humanity. Of course, the EU is also a democratic state formation which makes it similar to the US in a way. In particular, some similar economic and political strategies are observed while studying the structures of these two formations.
References
Burgess, M. Federalism and European Union: The Building of Europe, 1950-2000 /. London: Routledge. Web.
European Union. (2009). In The Columbia Encyclopedia (6th ed.). New York: Columbia University Press. Web.
The European Union is a relatively new formation. This implies that each social sphere in the countries of the EU has changed one way or another as the states need to come to a common social system that will work effectively in every member-country of the Union. Moreover, because the general aim of the EU was, originally, to unite the nations (economy is the major aspect of the unification process), it is obvious that different social fields should, at least, in some aspects, function in similarly in the European level. In this respect, the main objectives of this work are 1) to discuss how the EU has been enabled to improve the human health in the recent years and 2) to observe the most significant obstacles that constrain the EU from performing the former task. The area under consideration is organ donation.
How Has the EU Been Enabled to Improve the Human Health?
The European Union is a conglomerate that is governed by its own fundamental laws. The Treaty on the Functioning of the European Union (TFEU) says the nations and the EU share their competences in many fields, public healthcare among them. 1 It implies that the authorities of the EU have to consider national interests and opinions. 2 Without coordination, no common measures in any sphere are possible.
Firstly, it is necessary to discuss the European Union Health Law. It is logical that a country or a group of nations closely connected to each other should have a special law that regulates the health protection area. On the one hand, it exists, on the other, it does not. According to Tamara K. Hervey and Jean V. McHale, “the EU’s legal order is relatively unstable, certainly when compared to the constitutional settlements of its Member States… what is needed is an understanding of EU law as a process.” 3 It means that the Health Law was not formed at once: the process has been on for decades and is continuing. It consists both of legislation and case laws.
There are always new treaties between the Member Countries that contribute to the Health Law. Although its form is not perfect, still the existing of a united legal base, the recognition of the Law’s existence, and the mutual urge to develop it further give opportunities to improve the human health in the whole Europe. Further on, the TFEU states that its policy “shall be directed towards improving public health, preventing physical and mental illness and diseases, and obviating sources of danger to physical and mental health.” 4 To fulfil this purpose, there is a need to implement, support, and develop a law that would regulate the health-protection system.
It is worth consideration how the European Health Law impacts the area of organ transplantation. According to Rory Watson, “while organ transplants are an established medical practice, queues are long and donation rates vary considerably across Europe.” 5 This is a description of the situation in 2010. In this case, there should be a law regulating the organ donation in the whole European Union. Consequently, after a lengthy discussion, such an act was adopted. Its main aim was to reduce the queues. There is a tendency that in a number of countries, citizens donate more organs than in others. Queues should be reduced in the countries lacking in donated organs. This measure perfectly corresponds to the principles of the TFEU that declares equality and non-discrimination.
The second aspect of how the EU has been enabled to improve the state of the health-protection system is combating illegal medical services, which used to be widely spread in the Eastern-European Member States. This is a burning issue, especially in the situation with the unequal amount of donated organs in the countries. This inequality causes the demand for illicit traffic of implants. According to the TFEU, “measures setting high standards of quality and safety of organs and substances of human origin, blood and blood derivatives” should be taken. 6 In case of illegal organ trading, one cannot expect any high standards. Moreover, criminals may obtain people’s organs against their will. Thus, it is a serious crime in all of its aspects, and it should be combated. The unified donation system may, at least, partly, remove the ground from under the illicit market.
Not only the TFEU and donation-regulating laws are aimed at achieving this goal. Also, there is the Council of Europe Convention against Trafficking in Human Organs. According to the document, its purpose is to resist the illegal taking of organs, their usage as implants, and the violation of national laws in the field. 7 The Convention also considers such matters as giving protection and help to the victims of illicit organ extraction. It is significant that the document suggests strict measures against legal organizations and their employees involved in organ-trading. This gives the society hope that the illegal activity will be punished adequately, and a reduction in the crime will be observed soon.
Further on, the Directive on Standards of Equality and Safety of Human Organs Intended for Transplantation states measures should be taken to minimise the risks of transplantation. 8 The Action Plan on Organ Donation and Transplantation is aimed at making the organ availability higher, transplantation services more accessible, and procedures safer. 9 These are important documents directed at improving the state of the medical sphere under consideration.
During the last two decades, the EU has been implementing the system of the so-called ‘soft economic governance.’ This instrument is being applied to various spheres including healthcare. Katherine Fierlbeck describes the open method of coordination (OMC), which means that the general strategic issues are solved by the EU, more specific objectives are pronounced by the Ministerial Council, and then, national governments put the ideas into practice. 10 As an outcome, they make reports of what is applicable and what is not. Thus, the EU has an opportunity to correct and improve the strategies. Special attention should be paid not only to improving the healthcare system but also to developing it. In this respect, it is necessary to support the area of medical research.
The OMC gives an opportunity to accomplish both goals. On the one hand, this approach helps improve the quality of public medical services. Reporting mistakes and correcting them without delays are crucially important tasks in such complex spheres as organ donation and transplantation. Furthermore, the measure allows reducing bureaucracy. It may release new financial resources for research and give it an impulse. Scientific studies are especially significant for such problematic medical branches as implantation. In such spheres, there is constantly a strong need for new methods, technologies, skills, and equipment.
The statistics show that step by step, the situation in organ donating improves. This may be viewed in the monthly statistics of Eurotransplant. 11 This organisation works on transplanting organs in several European countries such as Austria, Germany, Belgium, Croatia, Slovenia, Luxembourg, and the Netherlands. The tendency demonstrated by the statistics shows that the methods used by the EU to improve the public healthcare are, in general, successful. However, there are some barriers constraining the progressive policies from achieving better results than those which may be observed nowadays.
Obstacles
As for barriers in establishing and developing the unified donor organ system in the EU, the first one of them is that there are still contradictions between the Member States, even in such a ‘risky’ sphere as medical treatment. For example, from Case C-380/03, one may learn that in 2006, an argument between Germany and the European Union occurred that concerned the law against tobacco advertising. 12 The act was meant to significantly restrict the right to advertise tobacco products. It also concerned sponsoring tobacco ads. Germany refused to obey the new directive as it contradicted some of its national acts. The country appealed to the Court of Justice of the European Union, whose competences are stated in article 267 of the TFEU.
The situation resulted in a lawsuit which cancelled the directive and allowed to adopt it only in a much milder version. In fact, the court stated that the community has no right to regulate national markets. 13 Although this case does not concern organ donation directly, it serves as a vivid illustration of how contradictions between one country and the Union lead to undesirable consequences like canceling a legal act that concerns not only one state but many of them. The TFEU declares equality and cooperation in the sphere of health protection. 14 However, in reality, it may be hard to establish cooperation as national legal systems may contradict each other as well as they may be contrary to European acts.
The next obstacle is that the cost of public health services may rise significantly. According to Greer, “it is also now about the extent of government expenditure and to a changing degree the specific health policies and priorities of member states.” 15 The TFEU states that it aims at improving public medical services. 16 However, the document does not mention that the new system requires new financial resources gained from tax-payers. In the countries of the EU, the public systems of health protection are already relatively developed and need a large amount of investments from taxes. If more significant investments are required both from the national budget and the common one, governments will have to either reduce the expenditures on some other social spheres or to raise taxes. Thus, the measure may be unpopular among tax-payers and meet strong opposition. It may also cause a fall in the effectiveness of investments in other spheres besides public medical services. Moreover, organ transplantation is a specific and complicated area that requires more investments than many other branches of medicine.
Further on, one should not miss the factor of objective distinctions between European countries. Despite the fact that the EU is a united structure, its members still have differences which are sometimes huge. The variations concern the level of economic development, religion, culture, science and, no doubt, public healthcare. In some places, the level of education is not sufficient for the majority of the population to understand the necessity of developing such spheres as resuscitation, organ donation and transplantation. A lot of people are still suspicious of these practices and have an opinion that taxes should not be wasted on them. The public opinion influences the activity of the government and its priorities. That is why the sphere does not get enough financial support.
It is a serious obstacle that prevents relatively new branches of medicine from moving forward. The objective of eliminating this obstacle fully corresponds to the principles declared by the TFEU (namely, “health information and education” 17). It means that educational institutions and programs should be improved to rid the majority of their prejudices and give citizens an impulse to support perspective and innovative methods of saving people’s lives and healths.
To add, the systems of managing human materials differ in the countries of the EU. For example, Germany and Great Britain use the principle of informed consent while Portugal and Belgium operate with that of the presumed one. 18 In the national framework, the systems have been existing for three or four decades while the strategies of the EU in the area started to form only in the 2000s. Bringing all the approaches to conformity needs time, agreements, and legislative measures. However, the basic document called the Treaty on European Union declares that the EU’s functioning is based on the principles of conferment and proportionality. 19 It means that the EU’s government is formed by the nations directly. Moreover, the Treaty declares the priority of national identity. This is a natural contradiction which is hard to overcome, but measures should be taken to reach agreements in the sphere of public healthcare.
Another issue arisen by the TFEU is preventing diseases. 20 It includes not only preventive measures against illnesses but also diminishing the risks for donors and the donated. According to the Convention of Human Rights and Biomedicine, “scientific research in the field of biology and medicine shall be carried out freely, subject to the provisions of this Convention and the other legal provisions ensuring the protection of the human being.” 21 To make the donor and the person with a donated organ enjoy life, the specialists should be one hundred percent sure that they conduct operations and treatment correctly.
Moreover, there is a strong need to monitor the patient’s state after all the procedures have been performed. If complications are observed, they should be thoroughly analysed. That will not only help the patient but also stimulate the development of the whole branch. This is an important task which needs qualified scientific research. Moreover, a system of scientific patient monitoring (also research-based) should be formed. It will give an opportunity to compare results, make statistics, and draw correct conclusions. The EU needs to develop and adopt acts to solve this issue.
Summary
In this work, it has been analysed what the European Union has already done to improve public healthcare in its countries. The organ-donation branch serves as an illustrative example. Firstly, the Treaty on the Functioning of the European Union (TFEU) was adopted. It settles the most important strategic tasks for the system. Secondly, the TFEU is supported by the system called the European Union Health Law. Although it does not exist as a written act, it combines legislative documents and case laws. On the one hand, it may be difficult to use. On the other, it is flexible and changes constantly according to the situation. Thirdly, there is a law that regulates organ donation in general. It may help reduce the queues for donated organs in some countries of the EU. Fourthly, the Council of Europe Convention against Trafficking in Human Organs was adopted. It suggests effective measures against illicit trading and transportation in the area. Finally, the open method of coordination (OMC) was implemented. It helps reduce bureaucracy in the sphere of patient treatment, correct mistakes in a short time period, and give an impulse to medical research. All these acts and measures have proved to be effective. However, the situation is far from perfect, and there are obstacles constraining them from reaching effectiveness.
On the one hand, there are contradictions between national and European laws that sometimes hamper the implementation of effective measures. The second obstacle is that it may be hard to find financial sources to make improvements. The third one is that there is the lack of education in such problematic fields as implantation and organ donation, and it forms a partly negative public attitude to them. Moreover, the policies of managing human materials in the Member States were adopted much earlier than those in the EU, and bringing them to conformity may cause serious difficulties. Finally, it is urgent to have a well-coordinated system of monitoring the outcomes of medical procedures.
Bibliography
Primary Sources
Statutes and statutory instruments
Consolidated Version of the Treaty on European Union 2012.
Consolidated Version of the Treaty on the Functioning of the European Union 2012.
Convention for the Protection of Human Rights and Dignity of the Human Being with regard to the Application of Biology and Medicine: Convention on Human Rights and Biomedicine 1997.
EU Legislation and cases
Directive 2010/45/EU of the European Parliament and of the Council of 7 July 2010 on Standards of Equality and Safety of Human Organs Intended for Transplantation.
Action Plan on Organ Donation and Transplantation (2009-2015): Strengthened Cooperation between Member States.
Council of Europe Convention against Trafficking in Human Organs, Santiago de Compostela, 25.III.2015.
Case C-380/03, Federal Republic of Germany v. European Parliament and Council of the European Union (Tobacco Advertising II). Judgment of the Court (Grand Chamber) of 12 December 2006, [2006] ECR I-11573.
Secondary Sources
Books
TK Hervey and JV McHale, European Union Health Law: Themes and Implications (Cambridge University Press, 2015).
Contributions to edited books
Derrick Wyatt, ‘Community Competence to Regulate the Internal Market’ in Michael Dougan and Samantha Currie (eds), 50 Years of European Treaties (Hart Publishing 2009).
Journal articles
Scott L. Greer, ‘The Three Faces of European Union Health Policy: Policy, Markets, and Austerity’ (2017) Policy and Society, vol. 33
Katherine Fierlbeck. ‘The Changing Contours of Experimental Governance in European Health Care’ (2014) Social Science & Medicine, vol. 108
Rory Watson, ‘Pan-European organ transplant scheme promises to cut waiting times’ (2010) British Medical Journal, vol. 340
Websites
Eurotransplant, ‘Monthly Statistics’ . Web.
Footnotes
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 4.2.
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 5.1.
Tamara K. Hervey and Jean V. McHale, European Union Health Law: Themes and Implications (Cambridge University Press, 2015) 30.
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 168.1.
Rory Watson, ‘Pan-European organ transplant scheme promises to cut waiting times’ (2010) British Medical Journal, vol. 340, 1160, 1160.
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 168.4a.
Council of Europe Convention against Trafficking in Human Organs, Santiago de Compostela, 25.III.2015.
Directive 2010/45/EU of the European Parliament and of the Council of 7 July 2010 on Standards of Equality and Safety of Human Organs Intended for Transplantation.
Action Plan on Organ Donation and Transplantation (2009-2015): Strengthened Cooperation between Member States.
Katherine Fierlbeck. ‘The Changing Contours of Experimental Governance in European Health Care’ (2014) Social Science & Medicine, vol. 108, 89, 92.
Eurotransplant, ‘Monthly Statistics’. Web.
Case C-380/03, Federal Republic of Germany v. European Parliament and Council of the European Union (Tobacco Advertising II). Judgment of the Court (Grand Chamber) of 12 December 2006, [2006] ECR I-11573.
Derrick Wyatt, ‘Community Competence to Regulate the Internal Market’ in Michael Dougan and Samantha Currie (eds), 50 Years of European Treaties, 94.
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 168.2.
Scott L. Greer, ‘The Three Faces of European Union Health Policy: Policy, Markets, and Austerity’ (2017) Policy and Society, vol. 33, 13, 13.
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 168.1.
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 168.1.
Tamara K. Hervey and Jean V. McHale, European Union Health Law: Themes and Implications (Cambridge University Press, 2015) 358.
Consolidated Version of the Treaty on European Union 2012, articles 4-5.
Consolidated Version of the Treaty on the Functioning of the European Union 2012, article 168.1.
Convention for the Protection of Human Rights and Dignity of the Human Being with regard to the Application of Biology and Medicine: Convention on Human Rights and Biomedicine 1997.
The key similarities and differences between health care systems in EU Member States
The European Union is a formation that is comprised of several states belonging to a particular legal environment. It means that there are specific similarities in legislation. For instance, in 1992 institutions of the EU adopted a set of regulatory measures that should be applied to the sphere of health insurance. It resulted in the appearance and development of diverse practices aimed at the preservation of the level of health and its improvement in the majority of the EU states. For instance, private health insurance might be sold by diverse entities, both public and private to guarantee that its buyers will be provided with the needed health services.
It is one of the central similarities between health care systems in the EU. Additionally, there is one more common feature peculiar to the majority of the EU Member States. The fact is that care is provided through health systems. In other words, every member state is responsible for offering medical services to citizens via a systemic arrangement of public and quasi-market relationships. Additionally, every state of the EU is obliged to protect the health of the nation within its territory using health insurance and other methods.
At the same time, there are several differences in the functioning of health care systems in EU Member States that are preconditioned by the peculiarities of local legislation. For instance, one of the key differences is the extent of centralization of health system administration. Some states might manage their public health systems at the national level by suggesting specific recommendations to all units across the country. Other members of the EU administer these entities at sub-national levels. These differences result in the emergence of numerous divergences in the ways how health sectors are organized and function. However, the central vector of their development and reforming remain similar for all EU states.
Patient mobility based on EU law affecting health systems
Patient mobility is one of the central issues of the modern health care system of the EU. The fact is that the freedom of movement of people within Europe demands the provision of the appropriate health services and care if some emergent situation appears. Additionally, the increase of the extent of EU citizens mobility means that efficient regulation is needed to adapt health systems to these new conditions and ensure the collaboration across borders. For this reason, under the impact of these factors, the majority of member states introduced specific regulations to guarantee that all citizens of the EU will be provided with the access to all needed medical services.
That is why the prior authorization that might be demanded to receive health care services abroad is considered a significant barrier to the free movement of services and should be eliminated to ensure that all individuals will be able to move in diverse directions across the EU. At the same time, tendencies towards the further increase in the patient mobility give rise to numerous appeals for better coordination between states and their health sectors with the primary aim to ensure that all individuals will obtain the needed care. In such a way, patient mobility is one of the central factors impacting the EU health system and promoting its further integration and enhanced cooperation between member states. At the same time, numerous changes appear due to the future rise of patient mobility and their desire to obtain care in diverse regions.
References
Hervey, T., & McHale, J. (2015). European Union health law. Themes and implications. New York, NY: Cambridge University Press.
Thompson, S., & Mossialos, E. (n.d.). Private health insurance and the internal market. Web.
The EU is a union of states that cooperate to achieve economic and social benefits, and one of the tenets of this joint action is the implementation of laws and regulations that must be followed by all member-states. Recently, the EU’s government introduced the Air Pollution Policies Package, which targets the problem of pollution and environmental awareness. This paper will summarize this policy and discuss its four benefits and four downsides. Considering the benefits and the harms of the EU’s Clean Air Policy, one can conclude that the benefits for the stakeholders outweigh its harms.
The Clean Air Policy Package includes two stages of implementation; under the first one, the member states must reduce the air pollution levels by 2020 and further improve the quality of air by 2030 (European Environmental Agency, 2021). Hence, the first benefit for the member-states is that they have sufficient time to prepare regional laws, policies, and enforcement practices to ensure that businesses and other institutions reduce their emissions and air pollution rates. Thus, this policy’s first benefit is that state legislators who will be responsible for the implementation of this policy have sufficient time to enforce it in a step-by-step manner.
Another obvious benefit of this policy is that the uniform implementation of legislation that requires citizens and businesses to reduce the emissions of their vehicles or machines, which will affect the air quality of all states. The majority of the EU members are located in close proximity to one another, and therefore, the environmental issues in one country affect the quality of air and, therefore, the quality of life of the citizens in another. Hence, the uniform agreement allows addressing the problem that otherwise would be difficult to resolve since the countries that border one another will all make an effort to reduce the pollution levels. Therefore, the second benefit concerns the citizens of the EU member states, who are the primary stakeholders for this union.
The third benefit of this policy is linked to the businesses, primarily car manufacturers. One of the requirements of the Clean Air Policy is the elimination of outdated engines that eliminate large quantities of CO2 (European Environmental Agency, 2021). Notably, there are several local car manufacturing companies located in the EU. The policy’s requirements will prompt the citizens and businesses to purchase new cars, the emissions of which will align with the new standard. Therefore, although indirectly, this policy will benefit the local car manufacturers since they will be able to sell more vehicles.
The final benefit of this policy is the indirect impact on the innovation of the businesses. Although the primary target of this legislation is pollution and emission levels, it will also affect the way the local businesses operate because the management will have to invest in new equipment that will be less harmful to the environment. Therefore, these businesses will be forced to become more innovative and environmentally conscious, which should benefit them in the long term.
However, the obvious disadvantage of this policy is that the EU unifies states with different levels of economic development, which means that some may struggle economically when attempting to address the requirements of this regulation. For example, when comparing the level of economic development of Poland and Germany, one may note that businesses in the latter may find it easier to purchase machinery that does not emit pollution, which may not be the case for the firms in Poland. This downside primarily concerns businesses that will be forced to update their machinery and purchase new equipment that is less harmful to the environment when compared to the one they have used.
Another issue with this policy is that the citizens with low income will no longer have access to transportation via cars because the ones available on the market will be newer and therefore more expensive. This may affect the day-to-day life of these individuals because they will have to adjust the way they commute to work or other activities. Therefore, this policy creates an economic disadvantage for the citizens of the EU member states. Next, the third harm of this policy is that it does not offer flexibility for states or businesses that would need more time to adjust to the new requirements. Similar to the first harm, this issue concerns the difference in the level of economic development that exists among the EU member-states.
This policy does not consider this issue or the fact that in some less developed countries, the businesses use old equipment, while in developed states, they might have already updated their machinery. Finally, the last harm is that this policy does not offer financial support to the businesses and only puts forward requirements, which means that the local companies will have to invest in these updates on their own. In summary, this paper discusses the benefits and harms of the EU’s Clean Air Policy. The potential benefit from implementing this solution significantly outweighs the harms from it.
Reference
European Environmental Agency. (2021). Policy context. Web.
Tobacco consumption is the leading avoidable cause of death in Europe. Traditionally, the tobacco industry in Europe was left to regulate itself since tobacco use was viewed as a matter of personal choice and government regulation was weak. The tobacco industry argued that intense government regulation was unnecessary for a legal product that was used by individuals on their own volition.
However, this attitude changed rapidly in the EU starting from the late 1990s. The EU and its Member States singled out tobacco use as a vital area that needed significant government intervention and control. The Union recognized the significant health and economic burden that tobacco use caused to its constituent States and their citizens.
Statistics indicate that 650,000 people in the EU die because of smoke related health issues each year. Berger-Walliser and Bird reveal that tobacco consumption kills up to half of its users (1016). In addition to this, smoking costs the EU about $100 billion annually in health care costs and other indirect costs including premature disability and lost productivity.
For this reason, the member states agree that preventing smoking is good for the health and economic outcomes of the countries. With these considerations, the EU has implemented a series of directives and recommendations aimed at reducing tobacco use within the EU. One area that has been targeted in the aim to encourage a decline in tobacco use is advertisement.
This paper will endeavor to provide an informative image of the situation with tobacco advertising and sponsorships in the EU considering the legal obligation of EU member states to implement the Directive 2003/33/EC, which effectively banned the advertisement of tobacco products.
Advertising and Tobacco in the EU
The EU and its Member States have recognized the many adverse effects that tobacco use causes. To reduce the tobacco consumption levels within the region, the EU has concentrated on advertisement.
In spite of persistent claims by the tobacco industry that advertisement does not have any impact in the overall tobacco consumption among member states, the EU has consistently suggested that advertising does indeed affect tobacco consumption. Advertising is regarded as one of the most visible business activities and it aims at attracting people to use the advertised product and increases its market share of the product.
Advertising therefore plays a significant role in promoting sales and attracting new consumers. According to the European Health Forum, there is a positive relationship between aggregate cigarette advertising and aggregate cigarette consumption (Smith et al. 3). In addition to this, the EU contends that advertising is responsible for the favorable assessment of people who smoke by the rest of society.
This social acceptability contributes to the promotion of new smokers therefore increasing the number of tobacco users. The strategies and policies aimed at reducing tobacco use have therefore targeted multiple forms of tobacco advertising within the EU.
EU Regulations
From its early years, the EU had grand ambitions of reducing tobacco consumption among its member states. One area that has been particularly targeted by the European Commission is tobacco advertisement.
In 1998, the European Council issued directive 89/552/EEC, which required member states to impose a mandatory bad on all tobacco advertising and prohibit brand name sponsorship and promotion at public events (Gruning et al. 4). In response to this directive, the EU enacted ambitions legislation that sought to gradually phase out all forms of tobacco advertising and sponsorships within the EU region in a span of 9 years.
This was the first EU directive on tobacco advertising and sponsorship. The complete ban on tobacco advertising was supposed to begin with a ban on billboards and in cinemas, followed by a ban on newspaper and magazine advertising, and finally a ban on advertising in sports venues. The total EU ban was expected to be in place by 2006.
However, the ambitious directive failed to get unanimous support as major tobacco companies and some member states contested against it. This eventually led to the legislation being reviewed by the European Court of Justice (ECJ) after contention by players in the tobacco industry.
The first EU directive on tobacco advertising and sponsorship was annulled on October 2000 following the successful challenge by the tobacco industry (Gruning et al. 5). The judges in the European Court of Justice decided that the legislation was unlawful and therefore struck it down.
Council Recommendation 2003/ 54/ EC
A significant policy in the effort to prevent smoking in the EU is the Council Recommendation 2003/54/EC of 2 December 2002. This recommendation was aimed at encouraging EU member states to increase tobacco control. Emphasis was made on adopting strategies aimed at preventing tobacco use among the young population.
This emphasis was made due to the revelations that up to 90% of individuals started smoking before they reached the age of 18 (Giuseppe 48). This recommendation urges the EU member states to implement laws and measures aimed at preventing access of tobacco products to individuals under the age o18. In addition to this, the recommendation calls for greater restrictions to all forms of advertising of tobacco products.
Directive 2003/ 33/ EC
The new tobacco product directive implemented to replace the annulled directive 89/552/EEC was the Directive 2003/33/EC of 26 May 2003. This directive imposed an EU wide ban on the advertisement of tobacco products (Smith et al. 7). Specifically, the directive prohibited tobacco advertising in the press and printed media, and on the internet or by email.
The only form of advertisement permitted was publications intended exclusively for the tobacco trade. The directive also imposed restrictions on sponsorship and according to the directive, radio advertising of tobacco products is prohibited, and radio programmes may not be sponsored by tobacco companies.
Sponsorship of events involving several EU member states by tobacco companies was also prohibited and the distribution of free tobacco or promotional material during national sponsored events banned. All member states were required to comply with the directive by 2005 (Smith et al. 8). All members were expected to come up with penalties that would dissuade the tobacco industry from violating the terms of the directive.
The effectiveness of Directive 2003/33/EC was hampered since it failed to regulate indirect advertising. Specifically, the regulation did not regulate the use of non-tobacco products to promote tobacco brands. This weakness was exploited by tobacco companies, which replaced direct advertising with indirect advertising (Smith et al. 10).
In addition to this, this directive was week since it did not result in a complete ban on tobacco advertising. The industry is still able to advertise in cinemas and on billboards. In addition to this, tobacco advertisement can occur using merchandising. Tobacco companies are also permitted to sponsor events with participants coming from only one EU member state.
Directive 2010/ 13/ EU
This “Audiovisual Media Services Directive” imposes some regulations on the manner in which advertisements may occur through audiovisual products. This directive addresses a major setback in Directive 2003/33/EC namely indirect advertisement. The Directive prohibits audiovisual commercial communication that promotes tobacco usage by the viewers.
Following the implementation of Directive 2003/33/EC, the tobacco industry had used indirect forms of audiovisual commercial communication to circumvent the ban and therefore promote their product (Smith et al. 10).
The Directive closes this loophole by banning the use of indirect advertisement by the tobacco industry. The directive prohibits product placement of tobacco products in all audiovisual material circulated within the EU zone.
The Effect of Regulation in EU
The EU has recognized that tobacco products are exceptional and required additional regulation. The various directives and initiatives implemented by the EU to deal with tobacco consumption have had tremendous impact. The various policies and directives implemented have had significant positive outcomes in Europe. The trend in the EU has by the large been towards the achievement of a smoke-free Europe.
The European Commissioner for Health and Consumer Policy in 2011 declared that over the past decade, a clear trend towards smoke-free environments has been noted in some of the EU member states. In spite of the annulment of the directive 89/552/EEC, some countries still implemented their own legislation stimulated by this directive.
Supporters of the phased ban proposed by this directive such as the UK initiated their ban in December 1999. The UK government expedited the ban on print and billboard advertising on December 1999, which was two years before the EU ban would have come into effect (Giuseppe 45).
Increasing legislation by the EU has effectively discouraged new entrants in the European market. MarketLine Industry Profile reveals that due to advertising restrictions within EU member states, new entrants would find it increasingly difficult to establish a brand (14).
Due to advertising restriction, brand awareness is difficult to generate in the European tobacco market. The tobacco market has therefore continued to be dominated by the large players such as British American Tobacco, Philip Morris International and Imperial Tobacco Group.
The EU environment has taken significant steps to reduce the number of new smokers. Research indicates that most people begin smoking before reaching the age of 18. The EU has made significant steps towards preventing smoking among children and young people. Targeting this group is important for a number of reasons.
To the tobacco industry, the young market represents the future consumers of tobacco products (Berger-Walliser and Bird 1020). Introducing this group to tobacco ensures that the future growth in tobacco consumption is assured. For the European Health Forum, preventing this group from taking up smoking presents the most effective strategy of reducing tobacco use.
A number of strategies have been employed to discourage underage smoking. To begin with, Directive 2003/33/EC imposed a ban on the sale of tobacco to minors in all EU member states. Stiff penalties are imposed on any retailer who violates this legislation.
In addition to this, advertising to children is prohibited. In the latest move to discourage tobacco use, the European Parliament has approved a ban on flavored and menthol cigarettes. This ban, imposed in July 2013, aims to limit the appeal that cigarettes have to children and young people (MarketLine Industry Profile 17).
The EU has made use of health warnings to dissuade individuals from taking up smoking. Evidence reveals that health warnings can promote smoking cessation and discourage youth uptake (Giuseppe 210). The EU adheres to the “Framework Convention on Tobacco Control” (FCTC) which is an international treaty devoted to public health. The union has therefore revised its labeling policies to meet the guidelines stipulated by the FCTC.
In response to the EU policies informed by the FCTC, Member States have imposed regulations on the mandatory health warnings to be displayed on each cigarette packet. There are laws that require tobacco packaging to describe the harmful effects of tobacco in large and clear print.
The effectiveness of package warning depends on factors such as size and the position of the warning text or image. The EU requires warnings to cover at least 30% of the principal display areas on each package.
Recommendations have also been made for pictorial warnings to be included. While it is not a mandatory requirement, the EU allows countries to use pictorial health warnings and actually has a list of recommended images that might be used for this purpose.
Research indicates that pictorial health warnings are highly effective in reducing consumption levels of tobacco products (Berger-Walliser and Bird 1020). This warnings increase motivation to quit and help former smokers to remain abstinent. They also have a discouraging effect on youth to start smoking.
The EU has been engaged in moves aimed at implementing plane-packaging regulations in Europe. This is in response to the proposals made by Article 11 of the FCTC. The FCTC encourages the adoption of plain packaging to achieve the desirable outcomes of reduced tobacco use. Plain packaging has the potential to encourage a less favorable assessment of people who smoke.
Berger-Walliser and Bird reveal that packaging leads to significant image factors with smokers who consume certain brands being rated as trendy, stylish and outgoing (1043). These positive attributes contribute to the favorable assessment of people who smoke. With the introduction of plain packaging, the brand elements and brand imagery will be removed.
Individual governments have played a major role in the implementation of the policies against tobacco advertisement. The reason for this is that bans on tobacco advertisement are considered a health and safety issue meaning that they fall within the realm of individual national governments in the EU.
The commitment of most EU states has led to the positive trend towards the achievement of a smoke-free Europe. However, there is still opposition from countries where the influence of the tobacco industry is still strong. Germany stands out as one of the few EU member states with strong opposition to stringent policies against tobacco.
Gruning et al. document that Germany has consistently employed weak tobacco control policies (6). The country also demonstrates strong opposed to the EU tobacco control legislation. This negative influence of Germany has slowed down the rate of change in tobacco control legislation. Even so, most governments have shown support for anti-tobacco legislations.
Opposition to EU Regulations
The tobacco industry has been the strongest opponent to any comprehensive ban on advertising. The industry asserts that advertising does not have any effect on aggregate consumption but rather affects the share of customers a particular brand is able to win over in the cigarette market. The tobacco industry has seen EU regulations as a major threat to the future growth and productivity of the industry.
The major companies in this industry have therefore engaged in activities aimed at preventing policies that are detrimental to the tobacco industry. Research by Smith et al. reveals that tobacco companies such as BAT have engaged in the promotion of IA in Europe as a measure to undermine anti-tobacco policies (3).
Secret tobacco industry documents made public through court orders have shown how transnational tobacco corporations have joined forces to counter policies that inhibit the industry. The strategies used by the tobacco corporations include influencing specific countries to undermine strong conventions against the tobacco industry.
Smith et al. observe that Germany was earmarked by the transnational tobacco corporations as one of the countries that would play a big role in undermining the effect of anti-tobacco policies including the strong Framework Convention on Tobacco Control (7). Gruning et al. confirm that the tobacco industry has made use of some EU member states to limit the EU mandate and therefore weaken the anti-tobacco legislation (21).
Germany has been lobbied by the tobacco industry to push against a comprehensive mandate on the issue of tobacco advertising. The country has played a part in the refusal to grant the EU more competences and therefore expand its mandate. Germany has been able to achieve some measurable success in this because of its considerable economic and political influence in the EU.
The European environment has witnessed a greater push for risk assessment and impact assessment. Before a major EU policy can be made, an impact assessment (IA) must be made. Ideally, IA as a tool for evaluating potential legislative changes ensures that policy decisions are more transparent, scientific, democratic, and rational.
Tobacco companies have pushed for more business-oriented impact assessments before policies can be implemented. This has benefited the companies since the IA often favor corporations. Smith et al. state, “The tobacco industry has already used IA commitments and the requirement for stakeholder consultation to actively challenge EU tobacco control legislation” (6).
The tobacco industry has overemphasized on the negative economic costs associated with anti-tobacco laws and used this argument as the grounds for weaker legislation. The tobacco industry has attempted to underplay the health impacts of its products while prioritizing business interests. This suggests that IA has been used to advance the interests of major corporation even at the expense of health.
Discussion and Conclusion
The European Union has established itself as a global frontrunner in tobacco control. This union has imposed some of the most stringent policies to deter tobacco use and therefore citizens in the member states from the harmful effects of tobacco use. From the information provided in this paper, it is clear that the EU has made significant strides against tobacco advertising.
There has been a marked reduction in advertisement and the tobacco industry’s growth has been protracted. The EU tobacco market has not witnessed any new entrant due to the advertising limitations imposed though the EU. The EU has therefore experienced a decline in consumption of tobacco over the years.
Even so, tobacco use is still a pressing concern for EU member states since tobacco consumption remains to be the leading contributor to disease and other chronic health problems. The EU environment has been characterized by intense opposition by the tobacco industry to some policies meant to reduce tobacco consumption in the EU region.
The paper has noted how tobacco lobbyists have influenced some member states to make their case against stringent measures. The opposition by the tobacco industry continues to be a challenge that must be addressed for a smoke-free Europe to be achieved.
Works Cited
Berger-Walliser, Gerlinde and Bird Robert. “The Impact of Plain Packaging Regulation on Illicit and Non-Illicit Tobacco Products in the European Union.” North Carolina Journal of International Law & Commercial Regulation 38.4 (2013): 1015-1060. Web.
Gruning, Thilo, Heide Weishaar, Jeff Collin and Gilmore Anna. “Tobacco industry attempts to influence and use the German government to undermine the WHO Framework Convention on Tobacco Control.” Tobacco Control 21.1 (2011): 1-47. Web.
MarketLine Industry Profile. Tobacco in Europe. London: Marketline, 2012. Print.
Smith, Katherine, Fooks Gary, Collin Jeff, Weishaar Heide, Sema Mandal and Gilmore Anna. “‘Working the System’—British American Tobacco’s Influence on the European Union Treaty and Its Implications for Policy: An Analysis of Internal Tobacco Industry Documents.” PLoS Medicine 7.1 (2010): 1-17. Web.
According to Miszczynski (p. 6), Poland is a significant player in economy of the European Union. It is one of the largest states in the Central Europe with a population of about 39 million. The country is still adjusting itself to a liberal market system after abandoning the communist market system.
This was one of the pre-qualifications for joining the European Union. The country was included into the European Union in the year 2004. From the beginning of the 20th century, the economy of Poland has been growing steadily. Before the emergence of the global financial crisis, the GDP of Poland grew at an average of 5 percent each year (Kozun-Cieslak 87).
Poland is a transitional economy, a factor that makes it susceptible to financial turmoil in the European Union. However, the economy of Poland has not been severely affected by the economic crisis in the Euro zone. The country still faces many economic challenges most of which emanate from the lack of efficient political structures.
Most of the economic problems that the economy has are structural in nature (Kozun-Cieslak 88). The paper discusses the political economy of Poland in the context of the European Union; it also looks into significant economic policies that are pursued by the country in relation to its membership in the EU.
Policy concerning the economic position of Poland in the Eurozone
With one of the strongest economies in Central Europe, the country is becoming a leading player in the policies of the European Union. The economy of Poland is in the spotlight on the world arena today. It has managed to withstand financial pressures from the financial crisis in Europe.
The Polish economy has not shown signs of recession in the last two years, a period in which the crisis was at its peak (Rosenberg 475). The main problem of Poland, which affects its economic influence in the larger European Union economy, is the lack of voting power. This is one of the policy areas that is being pursued by the country. This issue puts the country at loggerheads with the European Union (Gebert, para. 3).
Poland has come out as one of the leading economies in the entire Euro zone amidst the problematic business climate witnessed in the last four years. Poland continues to push for a strong position at the high table of the union. Its efforts are hampered by many factors among them the influence of the dominant economies in the region. The county aspires to join the Euro zone remaining an observer in the affairs of the Euro zone.
The economic growth prospect of Poland has continued to exceed projections. This denotes the strength of the country amongst the countries that form the economic block. However, the country still experiences isolation in regards to investments. Research shows that foreign investors still shun from investing in the Polish economy. Investors from other European states, especially those in Western Europe, still associate the economy of Poland with other economies of Central Europe.
The economy of Poland is bound to be affected by economic activities in the European Union as the country trades with other European states. Many economists argue that Poland should be given a room to advance ideas and voice opinions in the Euro zone. The economy of Poland is gaining strong foundations in Europe and any negative forces of the economy are bound to cause negative impacts on other trading partners in Europe (Gebert, para. 4-5).
The pursuance of foreign policy by Poland in the EU
As an adapting member of the European Union, much of the foreign policy of Poland is centered around the regional economic relations. In order to strengthen its relations with the main economic power of the European Union, the country is working on a structure of detaching from the affairs of Central Europe countries. However, this is not a straightforward issue as the affairs of these countries have a direct impact on its economy.
The country has economic issues to solve as it is concerned with the securing of its borders and the settlement of frictions with its neighboring states. Its neighborhood with Eastern Europe forms the present policy agenda. Poland remains a key player in the political and economic development of the region. As it seeks to enhance market liberalism, the country is putting on pace in policy areas in the union.
The country continues to pursue foreign policy areas that focus on economic enhancement with other countries of the European Union. Most of the policy discussions center on the development of balance fiscal policies which have to favor all the members of the European Union (Gebert, para. 6).
Impacts of Poland Membership in the EU
The main priorities of the policy of Poland in the European Union have majored on building relations with members of the union. The country seeks to become an influential member of the union for it to enlarge its economic size and potential in the region (President PL Website, para. 6). By virtue of being a member of the European Union, Poland has derived benefits and losses. Most of the positive factors are derived from the economic benefits that are accrued from integration.
The country is expected to keep benefiting from the expanded market through trading with other countries in the union (Organization for Economic Cooperation and Development 89). Increased trade relations with other countries are resulting in the improvement of the social conditions of the population of the country. The country is also improving in the area of political security.
This is an essential component of economic and social development (Skotnicka-Illasiewicz 9). Poland is reaping the benefits of an open and liberalized market economy. It is worth to mention that the decision of the country to join the European Union has brought about friction between the country and its neighbors. The frictions are ongoing and have affected the participation of the country in trade (Szczerbia 1939).
Country specific features and investment in Poland
Poland presents a favorable climate for investment in the European Union. Poland is a fast growing economy. The GDP of the country has been expanding at an accelerating pace (Kozun-Cieslak 86). When this is translated into economic terms, it means that the volume of trade is widening meaning the industry is also widening.
The country has a relatively large population of approximately 39 million people presenting a potential market for the country. The majority of the Polish are well educated and make quality employees being an opportunity for foreign investors who can hire employees hence cutting on the cost of expatriating employees (Wach, para.2).
The act of joining the European Union adds to the economic potential of the country. A substantial number of opportunities are presented. Among these opportunities is the expansion of the market for the industry of the country. Investors in the country are being guaranteed an expansive market for products and services (Miszczynski 6).
Since it joined the European Union, the country has kept up the pace of economic expansion through infrastructure development. Its membership in the European Union also presents economic disadvantages to the country. The economic environment of the country has become competitive due to the opening of the country to goods and services from other European economies. External investors have to be aware of the growing competitiveness of the economy (Kozun-Cieslak 86).
The country still suffers from institutional weaknesses, a factor that exposes it to economic setbacks. The foundation of economic freedom has not gained strong roots in the country. It is caused by the prevalence of unethical standards like corruption and a judiciary system that is not independent.
The judiciary of the country is often subjected to political interference and manipulation. This climate is threatening and has to be considered by potential investors. The government of the country has been active in eliminating these vices. However, the pace at which changes are taking place is still low (‘Poland: Economic Freedom Score’ 1).
Conclusion
Poland presents one of the upcoming economies in the European Union. The country has provided an example of strong economy in the recent times having managed to withstand the recent financial crisis in Europe. The country continues to pursue policies most of which are aimed at improving its position in the European Union. The economic indicators also portray the country as an economy that is presenting many opportunities for investment in Europe.
Kozun-Cieslak, G. Foreign Direct Investments in Poland – Report for the End of 2004 and New Facts. Folia Oeconomica Stetinensia. 7.1 (2008): 63-86. Print.
Miszczynski, M. Knowledge-economy as a utopia. The case of Poland. Studia Universitatis Babes-Bolya. Studia Europaea. 57. 2 (2012): 5-28. Print.
Organization for Economic Co-operation and Development. Oecd Economic Surveys: Poland – Volume 2006 Issue 11. Paris: Organization for Economic Co-operation and Development, 2006. Print.
The EU is an amalgamation of 27 countries in Europe that came together for economic and political purposes. One of the EU members is the UK, which has several businesses that operates across the EU. On the economic front, there is provision for a large market base for businesses in the region and they even experience less trade restrictions and tariff levy.
The wide outlets make businesses within the EU to register high profits with a low cost of production thus maintaining a strong financial base. However, an attempt by the UK to withdraw its membership from the union has negative financial effects to the UK and businesses within the UK.
An example of a business within the UK is the Carr’s Milling Industries Plc. This firm falls under the agricultural sector. It has three major divisions namely food, engineering and agriculture. On agriculture, it supplies farm products such as livestock feeds, farm lubricants, and oil under the Carrs Billington Agriculture. Notably, it commands a large market in all the 27 EU states. The firm was formed in 2005 after AF feeds, Carrs Agriculture Ltd and Billington Agriculture Ltd merged.
It has a network of 23 retail branches and, currently, performs quite well at the London Stock Exchange with a share price of £1,150 and a positive rise of £40 that represents +3.60%. In addition, at the end of the 2012 fiscal year in august, the firm registered sales of $639.3M, a net income of $13.5M and a one year growth of 4.7%. I picked this firm since agricultural products are the major human consumption; therefore, an analysis into the operation of this firm will reveal its impact in the global consumption market.
Evidently, the finished products of Carrs Billington Agriculture have their consumers in the entire EU. As a result, UK’s withdrawal from the EU will reduce the market size for this agricultural firm, which earlier was enjoying free tariffs between the member states. This step will increase the trade barriers and restrictions for the products leaving UK to other EU member countries. Markedly, UK’s 40% of exports go to Europe.
These effects will tremendously reduce the trade volumes and returns in the agricultural sector hence leading to layoffs within Carrs Billington Agriculture. Again, the UK will not have any say on the single market laws but will continue contributing funds according the Common Agriculture Policy requirements. Sadly, no farmer from UK will receive the cash. Moreover, attempts by UK to impose tariffs that are at odds with the single market agreement of EU will be rejected out rightly.
In return, UK will experience a decrease in economic growth and, possibly, a negative net income for Carrs Billington Agriculture. These sanctions or restrictions will reduce the Gross Domestic Product (GDP) of UK. This will translate to increased prices for the essential products and with little money circulation among the people, there will be a decrease in the people’s living standards.
Additionally, leaving the EU will weaken the UK’s currency. The uncertainties that come with withdrawal from a regional body may put off investors from moving into the UK. The investors will also move out with their wealth of knowledge. In essence, the international relationship between UK and other European nations will greatly be affected; for instance, the Italian cheese and French wines will attract high taxation making people to shy away from consuming them.
Currently, the European Union (EU) has seen powerful anti-globalization trends due to the peculiarities of political and economic conjuncture in the region. The UK is the country where decentralization moods continue to spread among the representatives of broad social layers. Analytics have begun to count the probable economic losses that can be caused by the UK exit from the Eurozone. It is estimated that the harm may exceed USD 100 billion.
Moreover, the outcomes of these developments could be highly negative for the employment situation and business climate in general. In such conditions, managers should mind these political changes in their strategic planning concepts for the future decades. The following paper aims to observe the article under consideration in detail to derive important information to implement in the strategic planning approaches development for the coming decades.
Serious Economic Shock Can Be Caused by the UK Withdrawal from the EU
The anti-globalization trends currently observed in a row of countries in the EU begin to have a more serious nature. The trend emerged in the south of the EU economic formation from such countries as Greece and Spain. The leaders of these countries have expressed their concerns that the economic rules imposed by the EU violate their interests and cause economic downfall. Moreover, they feel that huge contributions obligatory for all the EU members are another cause of their economic hardships.
Similar concerns have affected the British leaders who are confident that the country is paying too much for too few benefits, and Europe is too inward-looking to be able to offer any attractive conditions to Britain (Martinez-Brawley & Zorita 2015). Thinking about the considerable financial losses the country budget suffers from due to membership in the EU, the UK leaders began to develop the anti-globalization strategy.
An important factor was also the refugee problem since according to the EU regulations the UK was obliged to accept hundreds of thousands of refugees from the mainly Arabian origin. This tendency began to be a serious concern for the UK government due to a social and ethnic shift in the population demographic background. Moreover, the British have long been impacted by the concept of their exceptionalism, both political and ethnic (Martinez-Brawley & Zorita 2015). With all these complexities in mind, the growing number of UK politicians began to develop the plan to withdraw the EU in the nearest time. However, they have faced another problem.
The key problem associated with the UK exit from the Eurozone is associated with huge business losses because the country’s economy was developed as an integral part of the EU from the year 2000. According to the CBI quoted in EU referendum (2016), “a UK exit from the EU would cause a “serious economic shock”, potentially costing the country £100bn and nearly one million jobs” (para. 1). The representatives from the country’s business community express their concerns that the decision to leave would cost the UK economy negative outcomes for many years. The BBC article under consideration provides one of the opinions that the estimated harm can amount to as much as “5% of GDP and 950,000 jobs by 2020” (EU referendum 2016, para. 4).
In addition, the article mentions concerns of those experts who predict the decline in economic growth rates in case the UK leaves the Eurozone. Another problem that the proponents of the country’s stay in the EU mention is the possibility of uncertainty that would stop the economic processes in Great Britain for at least two years. They explain that after the possible withdrawal from the EU, the UK will need to facilitate the new format of economic relations with the EU, and WTO and for the reasons associated with uncertainty this task completion may take from one to two years.
The outcomes of all these development for the UK common citizens would be the decrease of income per head. According to The Centre for Economic Performance cited in EU referendum (2016), economic analysis suggests that the exit from the EU will lead to the decline in the rate of income per capita at the rate between 1.3% and 2.7%. Generally, a considerable part of the country’s economic elite is concerned about the negative endpoints of the UK withdrawal for the business and economics. However, not all experts support such position. Below, the position of opponents of this opinion will be addressed based on the BBC data.
The Opponents’ Position
The BBC article has overviewed the position of experts who argue that the UK exit from the Eurozone is not only non-problematic for the economy and business, but, on the contrary, it will lead to the boost of growth, quality of life promotion, and general economic and financial upsurge in the country. According to EU referendum (2016), Matthew Elliott, who is a Vote Leave chief executive, is confident that the UK withdrawal would only serve a boost for the new jobs creation and continuous economic growth. Cited in EU referendum (2016) Elliott commented that “even in the CBI’s skewed choice of scenarios for exit it was forced to admit that would happen” (para. 7).
Carolyn Fairbairn, CBI director general, supports Elliott’s position by stating that “EU exit following the referendum on 23 June would be a real blow for living standards, jobs and growth” (EU referendum 2016, para. 8). Explaining her position, Fairbairn commented that “the savings from reduced EU budget contributions and regulation are greatly outweighed by the negative impact on trade and investment” (EU referendum 2016, para. 8). Refuting the apprehensions of those who fear that the EU exit would cost the country the economic growth slowdown, Vote Leave’s Mr. Elliott has stated that “average annual economic growth in both exit scenarios between 2020 and 2030 would equal – and in some cases beat – GDP forecasts for the UK remaining in the EU” (EU referendum 2016, para. 11).
The Implications of the Article to Strategic Planning Approaches
Evaluating the data on the possible recession in the UK economy due to exit from the Eurozone, business players from both the UK and partnering countries need to be aware of the anti-globalization tendencies spreading in Europe to make updates in their strategic planning approaches (Hitt, Ireland & Hoskisson, 2012). According to Frynas and Mellahi (2015), political developments are an important variable that should be always taken into consideration by the senior managers engaged in the firm’s strategic planning activities.
This is especially the case for the businesses that are intended to employ suppliers and engage in business relations with the partners from various countries around the EU. In the event of the UK exit from the EU, all businesses purchasing resources, constitute parts or vice verse, selling them to other areas around Europe will face the new taxing rules. As a result, business profitability can be significantly reduced. Therefore, it is the high time for such businesses to readdress their strategic planning approach taking into consideration the probability of the UK withdrawal from the EU.
Another aspect of the impact of possible British exit from the EU is the harm that is predicted for the huge amount of unfinished EU business. This complexity of the existing anti-globalization trend in the UK should be also taken into attention by the considerate managers. Evaluating the possibility of the new political developments in the UK, Hill, Jones, and Schilling (2014) have written in their book on strategic management as early as in the year 2014 that clear-sighted business leaders should incorporate alterations into their strategic planning to address possible threats of the British exit from the Eurozone.
These authors are confident that political divisions between the UK and EU are so notorious that even if the country would continue as a part of the economic treaty, the business owners need to be aware of the unique economic climate and political environment that continues to be formed in it (Hill et al., 2014). In addition, these scholars have recommended beginning revaluation of strategic planning approach with readdressing the banking policy since the UK is planning to reshape its financial and banking system to ensure better conditions for the nationally-based businesses.
A yet another point that business owners would need to consider with regards to the possibility of the UK withdrawal from the EU is the perspective of reshaping British standardization systems. Currently, British business public has expressed concerns that the standardization rules imposed by Brussels including the regulations on energy production and transferring, taxation rules, alcohol sales policy, recycling standards, defense regulations, industry organization, and many more contradict the UK national interests.
Therefore, business owners, whose activity depends on using standardization regulations, should obtain information on the planned changes in order to ensure the possibility to shift to the new standardization systems (Hill et al., 2014). A special area of discontent of the British elite is the European quotas system. Managers who rely on the principle of European quota distribution in their business planning need to readdress this aspect in their future business plans.
The References of the Current Political Developments in the UK to Management Theories and Concepts
Management theories and concepts that overview the recent anti-globalization developments in the UK provide a row of new insights into the issue. Goetsch and Davis (2014) have stated that the current political processes in the Great Britain refer to the concept of global colonialism resistance. Facing the negative impact of globalization on the country’s economy, the British leaders have considered an opportunity to restrict the impact of global colonialism in their land through economic regulations (Goetsch & Davis 2014). Another theory explaining today’s political developments in the UK is the theory of strategic management in the face of anti-globalization movement.
This theory states that the negative impacts of globalization such as the intertwinement between transnational companies and political power, and the threat to cultural diversity have caused the rise of anti-globalization movements around the world (Goetsch & Davis 2014). In addition, this theory explains the anti-globalization trends by the wide public dissatisfaction with the national social welfare expenditures cutting, frequent economic crises, worsening working conditions, and exploitation of resources in developing countries (Goetsch & Davis 2014).
Conclusion
In conclusion, it should be pointed out that to the peculiarities of political and economic conjuncture in Europe have caused powerful anti-globalization trends formation. The UK is one of the European countries affected by these tendencies more than others due to the discontentedness with the EU economic policy, significant collections into the European budget, and the country’s own ambition to make an emphasis on its exceptionalism. This paper has observed the article from the BBC website addressing the anti-globalization trends in the UK and their possible impact on the country’s economy with an objective to derive important information to implement in the strategic planning approaches development.
The analysis of the article findings has demonstrated that the probable economic losses that can be caused by the UK exit from the Eurozone are estimated at the level of over $100 USD. In addition, the endpoints of these developments could be highly negative for the employment situation and business climate in general. Of course, not all economic climate analyzing professionals agree on the size of the harm caused to the UK economy by the exit from the Eurozone. Some of the experts are rather positive about the new political situation and its final result of the British exit from the EU. Still, no matter what outcomes will take place in the future, business owners should take these political changes into attention by incorporating them in their strategic planning concepts for the coming decades.
Frynas, J & Mellahi, K 2015, Global strategic management, Oxford University Press, Oxford.
Goetsch, D & Davis, S 2014, Quality management for organizational excellence, Pearson, London.
Hill, C, Jones, G, & Schilling, M 2014, Strategic management: Theory, an integrated approach, Cengage Learning, London.
Hitt, M, Ireland, R & Hoskisson, R 2012, Strategic management cases: competitiveness and globalization, Cengage Learning, London.
Martinez-Brawley, E & Zorita, P 2015, ‘Moving away from globalization and the “flattening” of Social Work: Preserving Context in International Efforts,’ European Journal of Social Work, 1-14.
Since the commencement of the 2007/2008 global economic meltdown, speculations surrounding the economic situation in the euro zone have been quite rampant. Several reasons have led to the current financial struggles in the euro zone. The dwindling economic relevance of the region in the global market is one of the greatest misgivings in the European economy. Factors contributing to the ailing economic environment are either internal or external.
External factors may include the current condition of the global market while the internal factors include political stability of countries in that particular region. This paper seeks to discuss the impacts of the political crisis in the euro zone on economic activities in the region.
The current economic situation
For quite a long time now, the banking industry in the euro zone has been struggling to survive in the financial market. The industry has been on a retarding growth for some years now. This has not created the best impression to prospective investors seeking to invest in the region.
For instance, Greece, a member state in the EU, has been placed in a difficult situation with its insolvency, which can only be solved by restructuring its current debts (Weltman, 2013). Economists argue that trying to exit the euro market will amount to a self-destructive financial move that could destroy even the political structure in the country (Weltman, 2013).
The only possible solution is to solve its financial problems within the confines of the single currency. Portugal and Ireland are also not safe from any kind of volatile actions in the euro zone. If the current situation deteriorates, these two countries will be exposed to serious financial problems (Weltman, 2013).
Italy and Spain have recently lost market access in the euro region but the situation is not very dire hence, they can survive the impacts (Weltman, 2013). Nonetheless, if this continues, the two countries will be forced to look for lasting solutions to their financial instabilities.
The debt of the European region has been greatly exposed by the banking systems in France and Belgium (Hughes, 2011). A scrutiny of the banking industry in the two countries shows that the capital needed to revive the industry is much higher compared with other countries.
This shows that both France and Belgium will have difficulties in recapitalizing their banking systems and this is a sign of a precarious financial future. The region has had a looming inflation rate reaching a record low of 3% and this has made the interest rates to remain very unstable in the region (Stavrou, 2011).
The inflation rate has further caused a decline in employment, as companies had to lay off their workers in order to maintain a reasonable wage bill (Palmer, Ketteridge, & Marshall, 2010). The euro zone is suffering economically due to its combined sovereign debt crisis, banking crisis as well the competition in economic growth and development (Bezemer, 2010).
As the economic gap grows wider, the region is exposed to greater financial challenges (Palmer, Ketteridge, & Marshall, 2010). The economic situation is dire in the euro zone although the situation is the same globally. However, the leaders in the region are actively seeking to develop measures that can help to reduce the deficit spending and debt levels (Beetham, 2007).
How do politics affect investor decisions?
In every region, political stability is very crucial to the economic and political development. Political stability is one of the major factors that influence the decisions made by investors.
Regions that are prone to rampant political chaos and rampages are less attractive to serious investors since the risk of investing in such areas is too high. Every administration has its own strategies and policies that govern the country’s investment procedures. Therefore, investors will always look at the political trends in a region before they commit their resources in that economy.
Political influence on the economy informs the decisions made by investors to invest on that economic niche. The legal and cost factors of any economic block are directly linked to its political standards (Aaronson & Biggins, 2005). The political leaders create the legislations governing investment policies and influence the cost of investing in the region. Ultimately, this affects the attractiveness of the region to investors based on legal procedures and cost of operation.
How does the Europe’s political turmoil affect the zone’s economy?
Economists argue that the euro zone’s political crisis is the epitome of its ailing economy. They warn that the political crisis being experienced in the region is a clear wake-up call for looming economic challenges ahead.
The political crisis has made it very difficult for the member-states to agree on the procedures of decision-making processes in the region (Aaronson & Biggins, 2005). The Germans and the French are the two main players in the euro zone’s struggle to revive the economy and the two have been accused of interfering with treaties in times of crisis (Palmer, Ketteridge, & Marshall, 2010).
As per the current situation, exiting the euro also means leaving the EU, which is a politically entrenched conjecture. The impact of this assumption is that it does not give democracy a chance and member-states are being coerced into remaining in the euro zone market (Solomon, Bamossy, Askegaard, & Hogg, 2006).
Therefore, it is very wrong for the European commission to rule out that any member-state considering exiting the euro must also leave the EU (Sloman & Wirde, 2009). This is actually infringing the democratic rights of the member states hence interfering with members’ political structures.
It is clear that the dominant Sarkozy and Markel administrations are creating a possibility for the commission to force exiting members out. This will have negative implications on the EU’s common market. In addition, the rating agencies have been under intense criticism from the European lawmakers for what has been termed as political manipulation.
The lawmakers accuse the rating agencies of being bias towards European assets (Trimikliniotis &Bozkurt, 2012). This was seen when the rating agencies downgraded Portugal’s public debt to a lower category ‘Ba2’ (Panayiotopoulos, 1995).
Impacts on potential investors
In the case of Cyprus, the decision made by the Eurogroup to impose a haircut tax on deposits has already done unimaginable harm to the financial sector. Economists foresee a situation whereby foreign investors will withdraw from the economy especially the Russians (Harvey, 2003). The decision was condemned globally and this has created a negative image of the European common market. Destroying the banking and financial systems is not the only harm that the decision has had on the euro zone.
The aftermath of the Erougroup’s decision on the Cyprus’ economy has greatly compromised the investors’ confidence in the international banking (Christodoulou, 1992).
The ultimate and dire effect of this is that investors are no longer interested in the euro market as a prospective investment destination. This will have a lasting financial and economic repercussion on the entire region. The looming euro zone economic meltdown will have a dire and direct impact on the European Union integration process.
It will further compromise investments in the region as the integration challenges may be perceived as lack of effective political leadership and consequent political instability. Investors will not commit their finances in a politically marred economic block.
Foreign investors are keenly watching the EU’s decisions and plans with regard to the financial crisis facing the region. The EU is under close surveillance by investors and so far, the trend has not been very impressive. This is slowly causing investors to shy away from exploiting the EU’s market.
Conclusion
This paper has critically examined the role of politics in financial markets with a keen interest in the euro zone. In the second paragraph, the paper has given a general overview of the current situation of the region’s economy. The different ways that politics can influence investors’ decisions have also been outlined in this paper to help us understand the relationship between political and business environments.
To show how political crisis can influence investors, the paper has discussed how the political turmoil in Europe affected the euro zone’s economy. Lastly, at the end of the paper, the impacts of the political crisis on investors have been clearly summarized giving a specific example of the Cyprus case.
References
Aaronson, A. & Biggins, B. (2005). Quantitative methods, European Journal of Research Methods, 9 (7), 10-13.
Beetham, H. (2007). Retail Economics. Abingdon, UK: Routledge.
Bessemer, D. J. (2010). Understanding financial crisis through accounting models, Accounting, Organization and Society, 35 (7), 676-688.
Christodoulou, D. (1992) Inside the Cyprus Miracle, the Labors of an Embattled Mini-Economy, Minneapolis, US: University of Minnesota.
Harvey, D. (2003). The New Imperialism. Oxford, UK: Oxford University Press.
Hughes, K. (2011). Europe’s political crisis at heart of euro zone meltdown. Web.
Palmer, A., Ketteridge, S. & Marshall, S. (2010). Political landscapes in Europe. Oxford, UK: Oxford University Press.
Panayiotopoulos, P. (1995). Cyprus: The Developmental State in Crisis, Capital and Class, 1 (57), 13-53.
Sloman, J. & Wirde, A. (2009). Economics. Harlow, UK: Pearson Education.
Solomon, M., Bamossy, G., Askegaard, S. & Hogg, M. K. (2006). Consumer behavior a European perspective. Harlow, UK: Financial Times.
Stavrou, P. (2011). The current economic and political situation in the Euro Area. Web.
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Economic integration involves the coordination of the economic and trade policies of many countries resulting into one trading bloc. Economic integration entails the setting of common trade tariffs and allowing free movement of human resources and capital across the borders of countries.
It also involves the coordination of fiscal and monetary policies between countries. The European Union (EU) is an economic union, where there is free movement of goods and services among member states, common external tariffs, free movement of labor and capital and a common currency among member states.
The EU economic integration has been a source of macro-economic benefits to the member states. However, economic integration also brings challenges among them lose of sovereignty of countries and low influence of small economies in the formulation of trade policies. Furthermore, the integration has the risk of developing protectionist trade barriers against countries outside of the economic union.
European Union
The European Union is an economic union made up of twenty-seven European countries. The integration came into existence after the World War II when the major governments of Europe set to unify their coal and steel industries. This culminated into the signing of the Rome treaty in 1957 that gave birth to the current European Union. The European Union has established a common customs union among member states.
In this arrangement, trade tariffs among member states are eliminated and a common external tariff on imports from the other countries put in place. The customs union agrees on the tariff rates of different imports from the other countries that are applied by all the member states. The European customs union has led to improved economic development in the region and established closer political and cultural ties among the member states.
The European Union common market facilitates the movement of goods and services, sets common external tariffs among the members and allows free movement of capital and labor across the borders of member countries.
Because of the common market, the citizens of any member country in the European Union can work and invest in any country within the EU without any restriction. The European Union has an established monetary union where countries forming the EU have a common currency, the Euro. The central monetary authority of the European Union determines a common monetary policy for the entire EU member states.
The signing of the European common currency treaty in 1991 led to the implementation of a single EU currency unit, the Euro. The creation of the European Union’s monetary authority reinforced the integration effects as it led to reduction in trade barriers through the elimination of the costs of exchange rate transactions. It also promoted clear comparisons of prices of commodities among the countries.
Benefits of Economic Integration
The economic integration of the European countries into the European Union contributed to the expansion of trade in the region (Baldwin and Wyplosz 2004, 45). The removal of trade barriers has led to the establishment of the European single market with a population of over 500 million people.
The large population provides a market for companies from the member has led to the establishment of the European single market with a population of over 500 million people. The large population provides a market for international companies from the member states to expand their growth.
The single market provides immense opportunities to businesses and the EU citizens alike with 2.15% of the GDP of EU countries coming from the trade in the single market. The single market has led to creation of jobs with more than six million jobs created in the last decade. This has also led to decline in the unemployment rates among the EU member states.
The member states of the European Union also benefit from the single monetary unit. The single currency (the Euro) promotes trade because it is easier to notice price alterations. In addition, the single currency ensures that prices of commodities are set at equal value in the different countries of the European Union.
The single currency leads to reduction in transaction costs as the exporters and consumers do not incur transaction costs associated with many currencies. The inter-currency conversion charges, costs associated with management of many currencies and cross-border banking charges are avoided with a common currency.
In addition, the single European monetary unit facilitates the removal of exchange rate related risks allowing companies to be competitive. Formerly, hedging was the only way of reducing risks associated with currency exchange. This meant that exporters could not avoid exchange rate risks especially when using currencies not intensively traded. However, with the single monetary unit, exporters have long-term protection against fluctuations in exchange rates.
The elimination of the many national currencies of the EU member states and the adoption of the Euro increased market transparency. The prices of products in the member states are directly comparable because of the single monetary unit (Neal and Berbezat 1998, 123). This has enhanced cross-border competition and increased trade flow across the EU trading block.
The increased price transparency encourages availability of trade information across the borders and ensures better allocation of capital and resources among the states. The removal of trade barriers to products produced within the EU member states promotes competition characterized by introduction of new brands of products into the various national markets.
The increase in cross-border price transparency, intra-brand competition is increased as price discrimination strategies are avoided. In addition, the transparency in prices provides a more effective way of comparing mergers and acquisitions of international companies. It also facilitates effective comparisons of balance sheets and operating capital of companies before acquisitions can occur.
The Launch of the Lisbon strategy in 2000 aimed at stimulating economic growth and creating more jobs for EU citizens. The policies adopted allow resource mobility across the borders. The increased labor mobility led to overturning of the employment imbalances across countries and increased the availability of labor to high-employment
Effects on Industrial Development
The long-term implications of EU integration involve the increase in the number of firms entering the market (Artis and Nixon 200, 115). The integration also encourages competition between industries across the borders of EU member states. The integration has also affected the location of industries.
Firms expand activities to exploit new markets beyond their home markets and acquire new resources. The EU integration also has an impact on industrial specialization. The decline in the cross-border transactions has allowed inter-industry specialization among the member states. The product market integration can also stimulate innovation and knowledge transfer among the member states.
Problems associated with EU Integration
When states choose to join the EU, they risk losing their national sovereignty. The EU member states agree to obey all the regulations and policies of the integration and by signing this agreement, states risk their sovereignty. According to Dyker the legal system of the EU does not recognize the sovereignty of the member states (2010, 54).
Instead, the states are subjected to control by the regulations of the EU. The European Court of Justice disciplines member states who contravene any of the agreed trade policies. Thus, the national sovereignty of member states is gradually reduced as they are forced to follow the EU law.
The EU integration affects industrial specialization as the integration encourages harmonization of income levels and resource distribution among the member states. The reduction in exchange rate of currencies results to a decline in uncertainty in cross-border transactions.
This encourages intra-trade industrial development that results in a decline in industrial specialization. The EU integration is disadvantageous to small states, which lack much influence to the formulation of policies as compared to large nations (Bindi 2010, 95). Small states have less influence on security issues as the larger nations dominate
Conclusion
The EU integration has led to the creation of a large market, which has helped promote the economic status of the region. The creation of a common market promotes expansion of trade and allows companies to trade in the international market. The monetary union has promoted inter-border transactions that have contributed immensely to the expansion of trade between the states.
In addition, the integration has encouraged environmental protection and stability in the region. However, the integration has disadvantages among them, lose of sovereignty of countries and low influence by small states to policy making. It suffices to say that the European Union membership has many advantages to the member states as opposed to the risks.
Reference List
Artis, Michael J, and Nixon, Frederick J. The Economics of the European Union: Policy and Analysis. London: Oxford University Press, 2001.
Baldwin, Richard M, and Wyplosz, Charles L. The Economics of European Integration. New York: McGraw Hill publishers, 2004.
Bindi, Federiga H. The Foreign Policy of the European Union: Assessing Europe’s Role in the World. USA
Brookings Institution Press, 2010.
Dyker, David A. The European Economy. New York: Pearson Education, 1999.
Neal, Larry H, and Berbezat, Daniel S. Economics of European Union and Economies of Europe. London: Oxford University Press, 1998.