The European Union (EU) is an economic and political union of 27 member states, located primarily in Europe. Committed to regional integration, the EU was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the pre-existing European Economic Community. Together the EU encompasses a population of 500 million and generates an estimated 30% share (US$18.4 trillion in 2008) of the nominal gross world product.

The EU has developed a single market through a standardised system of laws which apply in all member states, ensuring the freedom of movement of people, goods, services and capital. It maintains common policies on trade, agriculture, fisheries and regional development. A common currency, the euro, has been adopted by sixteen member states that are thus known as the Eurozone. The EU has developed a limited role in foreign policy, having representation at the WTO, G8 summits, and at the UN. It enacts legislation in justice and home affairs, including the abolition of passport controls between many member states which form part of the Schengen Area. Twenty-one EU countries are also members of NATO.

An international organisation sui generis, the EU operates through a hybrid system of supranationalism and intergovernmentalism. In certain areas, it depends upon agreement between the member states; in others, supranational bodies are able to make decisions without unanimity. Important institutions and bodies of the EU include the European Commission, the Council of the European Union, the European Council, the European Court of Justice, and the European Central Bank. The European Parliament is elected every five years by member states' citizens, to whom the citizenship of the European Union is guaranteed.

The EU traces its origins to the European Coal and Steel Community formed among six countries in 1951 and the Treaty of Rome in 1957. Since then the union has grown in size through the accession of new countries, and new policy areas have been added to the remit of the EU's institutions.

History

After the end of the Second World War, moves towards European integration were seen by many as an escape from the extreme forms of nationalism which had devastated the continent. One such attempt to unite Europeans was the European Coal and Steel Community which, while having the modest aim of centralised control of the previously national coal and steel industries of its member states, was declared to be "a first step in the federation of Europe". The originators and supporters of the Community include Jean Monnet, Robert Schuman, Paul Henri Spaak and Alcide de Gasperi. The founding members of the Community were Belgium, France, Italy, Luxembourg, the Netherlands and West Germany.

In 1957, the "Six" mentioned before signed the Treaties of Rome. These treaties extended the earlier cooperation within the European Coal and Steel Community and created the European Economic Community, (EEC) establishing a customs union and the European Atomic Energy Community (Euratom) for cooperation in developing nuclear energy. In 1967 the Merger Treaty created a single set of institutions for the three communities, which were collectively referred to as the European Communities, although more commonly just as the European Community (EC).

In 1973 the Communities enlarged to include Denmark, Ireland and the United Kingdom. Norway had negotiated to join at the same time but a referendum rejected membership and so it remained outside. In 1979 the first direct, democratic elections to the European Parliament were held.

Greece joined in 1981, and Spain and Portugal in 1986. In 1985 the Schengen Agreement created largely open borders without passport controls between most member states. In 1986 the European flag began to be used by the Community and the Single European Act was signed.

In 1990, after the fall of the Iron Curtain, the former East Germany became part of the Community as part of a newly united Germany. With enlargement toward East-Central Europe on the agenda, the Copenhagen criteria for candidate members to join the European Union were agreed.

The European Union was formally established when the Maastricht Treaty came into force on 1 November 1993, and in 1995 Austria, Sweden and Finland joined the newly established EU. In 2002, euro notes and coins replaced national currencies in 12 of the member states. Since then, the eurozone has increased to encompass sixteen countries, with Slovakia joining the eurozone on 1 January 2009. In 2004, the EU saw its biggest enlargement to date when Malta, Cyprus, Slovenia, Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, and Hungary joined the Union.

On 1 January 2007, Romania and Bulgaria became the EU's newest members and Slovenia adopted the euro. In December of that year European leaders signed the Lisbon Treaty which was intended to replace the earlier, failed European Constitution, which never came into force after being rejected by French and Dutch voters. However, uncertainty clouds the prospects of the Lisbon Treaty's coming into force as result of its rejection by Irish voters in June 2008. On 17 July 2009, the Parliament of Iceland agreed to formally apply for EU membership and to begin talks for an agreement to be put to a referendum to the Icelandic voters.

Member states

The European Union is composed of 27 independent sovereign states which are known as member states: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

There are three official candidate countries, Croatia, Macedonia, and Turkey. The western Balkan countries of Albania, Bosnia and Herzegovina, Montenegro, and Serbia are officially recognised as potential candidates. Kosovo is also listed by the European Commission as a potential candidate but the Commission does not list it as an independent country because not all member states recognise it as an independent country, separate from Serbia.

To join the EU, a country must meet the Copenhagen criteria, defined at the 1993 Copenhagen European Council. These require a stable democracy which respects human rights and the rule of law; a functioning market economy capable of competition within the EU; and the acceptance of the obligations of membership, including EU law. Evaluation of a country's fulfilment of the criteria is the responsibility of the European Council. The current framework does not specify how a country could exit the Union (although Greenland, and Faroe Islands (the latter being a part of the European continent) two territories of Denmark, withdrew in 1985), but the proposed Treaty of Lisbon contains a formal procedure for withdrawing.

Four Western European countries that have chosen not to join the EU have partly committed to the EU's economy and regulations: Iceland, Liechtenstein, and Norway are a part of the single market through the European Economic Area, and Switzerland has similar ties through bilateral treaties. The relationships of the European microstates: Andorra, Monaco, San Marino, and the Vatican include the use of the euro and other areas of co-operation.

Geography

The territory of the EU consists of the combined territories of its 27 member states with some exceptions outlined below. The territory of the EU is not the same as that of Europe, as parts of the continent are outside the EU, such as Iceland, Switzerland, Norway, and European Russia. Some parts of member states are not part of the EU, despite forming part of the European continent (for example the Isle of Man and Channel Islands two territories of the United Kingdom and the Faroe Islands, a territory of Denmark). The island country of Cyprus, a member of the EU, is approximate to Turkey – specifically, Anatolia (Asia Minor) – and often considered part of Asia.

Several territories associated with member states that are outside geographic Europe are also not part of the EU (such as Greenland, Aruba, the Netherlands Antilles, and all the non-European territories associated with the United Kingdom). Some overseas territories are part of the EU even if they are not geographically part of Europe, such as the Azores, the Canary Islands, Madeira, Lampedusa, French Guiana, Guadeloupe, Saint Martin, Saint Barthélemy, Martinique and Réunion (these last six regions have the status of Outermost Regions of the EU), Ceuta, Melilla and Saint Pierre and Miquelon. As well, although being technically part of the EU, EU law is suspended in Northern Cyprus as it is under the de facto control of the Turkish Republic of North Cyprus, a self-proclaimed state that is only recognised by Turkey.

The EU's member states cover a combined area of 4,422,773 square kilometres (1,707,642 sq mi). The total territory of the EU is larger than all but six countries and its highest peak is Mont Blanc in the Graian Alps, 4,807 metres (15,771 ft) above sea level. The landscape, climate, and economy of the EU are influenced by its coastline, which is 65,993 kilometres (41,006 mi) long. The EU has the world's second longest coastline, after Canada. The combined member states share land borders with 21 non-member states for a total of 12,441 kilometres (7,730 mi), the fifth longest border in the world.

Including the overseas territories of member states, the EU experiences most types of climate from Arctic to tropical, rendering meteorological averages for the EU as a whole meaningless. In practice, the majority of the population lives either in areas with a Mediterranean climate (Southern Europe), a temperate maritime climate (Western Europe), or a warm summer continental or hemiboreal climate (Eastern Europe).

Governance

The EU is often described as being divided into three areas of responsibility, called pillars. The original European Community policies form the first pillar, while the second consists of Common Foreign and Security Policy. The third pillar originally consisted of Justice and Home Affairs, however owing to changes introduced by the Amsterdam and Nice treaties, it currently consists of Police and Judicial Co-operation in Criminal Matters. Broadly speaking, the second and third pillars can be described as the intergovernmental pillars because the supranational institutions of the Commission, Parliament and the Court of Justice play less of a role or none at all, while the lead is taken by the intergovernmental Council of Ministers and the European Council. Most activities of the EU come under the first, Community pillar. This is mostly an economically oriented pillar and is where the supranational institutions have the most influence.

The activities of the EU are regulated by a number of institutions and bodies. They carry out the tasks and policies set out for them in the treaties. The EU receives its political leadership from the European Council, which is composed of one representative per member state — either its head of state or head of government — plus the President of the Commission. Each member state's representative is assisted by its Foreign Minister. The Council uses its leadership role to sort out disputes which have arisen between member states and the institutions, and to resolve political crises and disagreements over controversial issues and policies.

The Council is headed by a rotating presidency, with every member state taking the helm of the EU for a period of six months during which that country's representatives chair meetings of the European Council and the Council of Ministers. The member state holding the presidency typically uses it to drive a particular policy agenda such as economic reform, reform of the EU itself, enlargement or furthering European integration. The Council usually meet four times a year at European Summits.

The European Council should not be mistaken for the Council of Europe, an international organisation independent from the EU.

Institutions

The European Commission acts as the EU's executive arm and is responsible for initiating legislation and the day-to-day running of the EU. It is intended to act solely in the interest of the EU as a whole, as opposed to the Council which consists of leaders of member states who reflect national interests. The commission is also seen as the motor of European integration. It is currently composed of 27 commissioners for different areas of policy, one from each member state. The President of the Commission and all the other commissioners are nominated by the Council. Appointment of the Commission President, and also the Commission in its entirety, have to be confirmed by Parliament.

The European Parliament forms one half of the EU's legislature. The 785 Members of the European Parliament (MEPs) are directly elected by EU citizens every five years. Although MEPs are elected on a national basis, they sit according to political groups rather than their nationality. Each country has a set number of seats. The Parliament and the Council form and pass legislation jointly, using co-decision, in certain areas of policy. This procedure will extend to many new areas under the proposed Treaty of Lisbon, and hence increase the power and relevance of the Parliament. The Parliament also has the power to reject or censure the Commission and the EU budget. The President of the European Parliament carries out the role of speaker in parliament and represents it externally. The president and vice presidents are elected by MEPs every two and a half years.

The Council of the European Union (sometimes referred to as the Council of Ministers) forms the other half of the EU's legislature. It consists of a government minister from each member states and meets in different compositions depending on the policy area being addressed. Notwithstanding its different compositions, it is considered to be one single body. In addition to its legislative functions, the Council also exercises executive functions in relations to the Common Foreign and Security Policy.

The judicial branch of the EU consists of the European Court of Justice (ECJ) and the Court of First Instance. Together they interpret and apply the treaties and the law of the EU. The Court of First Instance mainly deals with cases taken by individuals and companies directly before the EU's courts, and the ECJ primarily deals with cases taken by member states, the institutions and cases referred to it by the courts of member states. Decisions from the Court of First Instance can be appealed to the Court of Justice but only on a point of law.

Legal system

The EU is based on a series of treaties. These first established the European Community and the EU, and then made amendments to those founding treaties. These are power-giving treaties which set broad policy goals and establish institutions with the necessary legal powers to implement those goals. These legal powers include the ability to enact legislation which can directly affect all member states and their inhabitants. Under the principle of supremacy, national courts are required to enforce the treaties that their member states have ratified, and thus the laws enacted under them, even if doing so requires them to ignore conflicting national law, and (within limits) even constitutional provisions.

The main legal acts of the EU come in three forms: regulations, directives and decisions. Regulations become law in all member states the moment they come into force, without the requirement for any implementing measures, and automatically override conflicting domestic provisions. Directives require member states to achieve a certain result while leaving them discretion as to how to achieve the result. The details of how they are to be implemented are left to member states. When the time limit for implementing directives passes, they may, under certain conditions, have direct effect in national law against Member States. Decisions offer an alternative to the two above modes of legislation. They are legal acts which only apply to specified individuals, companies or a particular Member State. They are most often used in Competition Law, or on rulings on State Aid, but are also frequently used for procedural or administrative matters within the institutions. Regulations, directives and decisions are of equal legal value and apply without any formal hierarchy.

One of the complicating features of the EU's legal system is the multiplicity of legislative procedures used to enact legislation. The treaties micro-manage the EU's powers, indicating different ways of adopting legislation for different policy areas and for different areas within the same policy areas. A common feature of the EU's legislative procedures, however, is that almost all legislation must be initiated by the Commission, rather than member states or European parliamentarians. The two most common procedures are co-decision, under which the European Parliament can veto proposed legislation, and consultation, under which Parliament is only permitted to give an opinion which can be ignored by European leaders. In most cases legislation must be agreed by the council.

National courts within the Member States play a key role in the EU as enforcers of EU law, and a "spirit of cooperation" between EU and national courts is laid down in the Treaties. National courts can apply EU law in domestic cases, and if they require clarification on the interpretation or validity of any EU legislation related to the case it may make a reference for a preliminary ruling to the ECJ. The right to declare EU legislation invalid however is reserved to the EU courts.

Economy

Since its origin, the EU has established a single economic market across the territory of all its members. Currently, a single currency is in use between the 16 members of the eurozone. If considered as a single economy, the EU generated an estimated nominal gross domestic product (GDP) of US$18.39 trillion (15.247 trillion international dollars based on purchasing power parity) in 2008, amounting to over 22% of the world's total economic output in terms of purchasing power parity, which makes it the largest economy in the world by nominal GDP and the second largest trade bloc economy in the world by PPP valuation of GDP. It is also the largest exporter of goods, the second largest importer, and the biggest trading partner to several large countries such as India and China.

170 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU. In May 2007 unemployment in the EU stood at 7% while investment was at 21.4% of GDP, inflation at 2.2% and public deficit at −0.9% of GDP. There is a great deal of variance for annual per capita income within individual EU states, these range from US$7,000 to US$69,000.

Single market

Two of the original core objectives of the European Economic Community were the development of a common market, subsequently renamed the single market, and a customs union between its member states. The single market involves the free circulation of goods, capital, people and services within the EU, and the customs union involves the application of a common external tariff on all goods entering the market. Once goods have been admitted into the market they can not be subjected to customs duties, discriminatory taxes or import quotas, as they travel internally. The non-EU member states of Iceland, Norway, Liechtenstein and Switzerland participate in the single market but not in the customs union. Half the trade in the EU is covered by legislation harmonised by the EU.

Free movement of capital is intended to permit movement of investments such as property purchases and buying of shares between countries. Until the drive towards Economic and Monetary Union the development of the capital provisions had been slow. Post-Maastricht there has been a rapidly developing corpus of ECJ judgements regarding this initially neglected freedom. The free movement of capital is unique insofar as that it is granted equally to non-member states.

The free movement of persons means citizens can move freely between member states to live, work, study or retire in another country. This required the lowering of administrative formalities and recognition of professional qualifications of other states.

The free movement of services and of establishment allows self-employed persons to move between member states in order to provide services on a temporary or permanent basis. While services account for between sixty and seventy percent of GDP, legislation in the area is not as developed as in other areas. This lacuna has been addressed by the recently passed Directive on services in the internal market which aims to liberalise the cross border provision of services. According to the Treaty the provision of services is a residual freedom that only applies if no other freedom is being exercised.

Monetary union

The creation of a European single currency became an official objective of the EU in 1969. However, it was only with the advent of the Maastricht Treaty in 1993 that member states were legally bound to start the monetary union no later than 1 January 1999. On this date the euro was duly launched by eleven of the then fifteen member states of the EU. It remained an accounting currency until 1 January 2002, when euro notes and coins were issued and national currencies began to phase out in the eurozone, which by then consisted of twelve member states. The eurozone has since grown to sixteen countries, the most recent being Slovakia which joined on 1 January 2009.

All other EU member states, except Denmark and the United Kingdom, are legally bound to join the euro when the economic conditions are met, however only a few countries have set target dates for accession. Sweden has circumvented the requirement to join the euro area by not meeting the membership criteria.

The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone. It is also intended as a political symbol of integration and stimulus for more.

The euro, and the monetary policies of those who have adopted it in agreement with the EU, are under the control of the European Central Bank (ECB). There are eleven other currencies used in the EU. A number of other countries outside the EU, such as Montenegro, use the euro without formal agreement with the ECB.