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Appendix 2 BRIEF SURVEY OF THE EUROPEAN UNION The EU’s roots lie in the European wars of the first half of the twentieth century.1 Inspired to keep history from repeating itself, six countries—Belgium, Luxembourg , the Netherlands, France, Italy, and Germany—first formed the European Coal and Steel Community (1952) and then the European Economic Community (EEC) and the European Atomic Energy Community (Euratom). The latter two were brought into existence with the signing of the Treaties of Rome in 1957.2 The EEC’s practical goal was to create a common, integrated market that would allow the free movement of goods, services, labor, and capital. The EEC’s first measures included creating a Common Agricultural Policy (CAP) that set prices, quotas, and subsidies for agricultural products of the member states. The CAP still takes up the lion’s share of the EU’s budget and for a time took up to 70 percent of it. The EEC also began eliminating tariff barriers and other nontariff obstacles to trade. Progress on these fronts was aided by the European Court of Justice’s interpretations of the treaty pertaining to the EEC.By the 1970s,the EEC had created a Customs Union, which ensured that a standard duty was paid on all items entering the EEC from “third” countries, no matter the point of entry. Also at that time, the EEC officially became the European Community. Early in the 1970s, the EC began trying to coordinate currency exchange rates to facilitate interstate commerce, which was the beginnings of the European Monetary System . In 1986, after protracted negotiation, the EC members signed the Single European Act (SEA), which eliminated remaining trade barriers and, in 1992, facilitated launch of the Single Market. The Single European Act created the structural funds, giving the EU a budget with which to subsidize development in 195 unindustrialized, rural areas and deindustrializing areas. The Maastricht Treaty (officially known as the Treaty of the European Union), signed in 1991 and implemented in 1993, was meant to further that effort. Formally, it established the European Union, of which the EC was one pillar. The other two—Justice and Home Affairs, and Common Foreign and Security Policy—operated only on a multilateral, state-to-state (intergovernmental) basis. The Maastricht Treaty contained the blueprint for creating the common currency, what came to be called the euro. The common currency was launched electronically in 2000, by fixing participating countries’exchange rates and then converting them to euros, and as a physical currency in 2002. The EU has added new members a number of times. The first expansion, in 1973, brought in Denmark, Ireland, and the United Kingdom. The second wave of expansion included Greece (1981) and Spain and Portugal (1986). The third brought in Austria, Finland, and Sweden in 1995, and the fourth, and largest, in 2004, Cyprus, Malta, Latvia, Estonia, Lithuania, Poland, Hungary, the Czech Republic ,Slovakia,and Slovenia.The fifth expansion saw Romania and Bulgaria become members in 2007. 196 APPENDIX 2 ...

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