THE EUROPEAN UNION:

The European Union or EU is an inter-governmental and supra-national organization, made up of European countries, which currently has 25 member states. The Union was established under that name by the Treaty on European Union commonly known as the Maastricht Treaty in 1992. However, many aspects of the EU existed before that date through a series of predecessor organisations, dating back to the 1950s.

There are 3 main institutions: The EU Council, the EU Parliament, and the EU Commission. Each has a President, and each has a specific role and responsibility.

The European Union's activities cover all policy areas, from health and economic policy to foreign affairs and defence. However, the nature of its powers differs between areas. Depending on the powers transferred to it by its member states, the EU therefore resembles a federation (e.g. monetary affairs, agricultural, trade and environmental policy), a confederation (e.g. in social and economic policy, consumer protection, internal affairs), or an international organisation (e.g. in foreign affairs). A key activity of the EU is the establishment and administration of a common single market, consisting of a customs union, a single currency , a Common Agricultural Policy and a Common Fisheries Policy.

Status

The members of the European Union have transferred more sovereignty to that regional organisation than any other members have to any other nonsovereign regional organisation. In certain areas where member states have transferred a degree of sovereignty to the Union, the EU begins to resemble a federation or confederation. However, the member states remain the masters of the Treaties, meaning that the Union does not have the power to transfer additional powers from the member states onto itself without their agreement. Also, the various member states maintain their own policies in key areas of national interest such as foreign relations and defence.
The current and future status of the European Union is the subject of great political concern within some European Union member states.

Current issues

Major issues facing the European Union at the moment include its enlargement to the south and east , its relationship with the United States of America, the revision of the rules of the Stability and Growth Pact, and the ratification of the European Constitution by member states.


Methods

To accomplish its aims, the European Union attempts to form infrastructure that crosses state borders. Harmonised standards create a larger, more efficient market - member states can form a single customs union without loss of health or safety. For example, states whose people would never agree to eat the same food might still agree on standards for labelling and cleanliness.

The power of the European Union reaches far beyond its borders, because to sell within it, it is beneficial to conform to its standards. Once a non-member country's factories, farmers and merchants conform to EU standards, most of the costs of joining the union have been sunk. At that point, harmonising laws to become a full member creates more wealth (by eliminating the customs costs) with only the tiny investment of actually changing the laws.

Regarding non-economic issues, supporters of the European Union argue that the EU is also a force for peace and democracy. Wars that were a periodic feature of the history of Western Europe have ceased since the formation of the EEC as it then was. In the early 1970s, Greece, Portugal and Spain were all dictatorships, but the business communities in these three countries wanted to be in the EU and this created a strong impetus for democracy there.

In more recent times, the European Union continues to extend its influence to the east. It has accepted several new members that were previously behind the Iron Curtain, and has plans to accept several more in the medium-term. It is hoped that in a similar fashion to the entry of Spain, Portugal and Greece, membership for these states will help cement economic and political stability.

Further eastward expansion also has long-term economic benefits, but the remaining European countries are not viewed as currently suitable for membership, especially the troubled economies of countries further east. Eventually including states that are currently politically unstable will, it is hoped, help deal with the lingering consequences of such problems as the Yugoslav wars, or avoid such conflicts as the Cyprus dispute in the future.


Member states and successive enlargements

The European Union has 25 member states, an area of 3,892,685 km² and approximately 460 million EU citizens as of December 2004. Were it a country, it would be the seventh largest in the world by area and the third largest by population after China and India.

The EU economy is expected to grow further over the next decade as more countries join the union - especially considering that the new States are usually poorer than the EU average, and hence the expected fast GDP growth will help achieve the dynamic of the united Europe. However, GDP per capita of the whole Union will fall over the short-term. In the long-term, the EU's economy suffers from significant demographic challenges, with a below-replacement birth rate.

The role of the European Community within the Union

The term European Community (or Communities) was used for the group of members prior to the establishment of the European Union. At present, the term continues to have significance, but in a different context. The "European Community" is one of the three pillars of the European Union, being both the most important pillar and the only one to operate primarily through supranational institutions. The other two pillars - Common Foreign and Security Policy, and Police and Judicial Co-operation in Criminal Matters - are looser intergovernmental groupings. Confusingly, these latter two concepts are increasingly administered by the Community (as they are built up from mere concepts to actual practice).

What most people think of as the European Union is essentially the European Community. The Community is an actual body, including the European institutions (European Parliament, Council of the European Union, European Commission), whilst the European Union is a less tangible grouping of institutions and agreements.

If it is ratified, the proposed new Treaty establishing a Constitution for Europe would abolish this dual structure, bringing all the Community's activities under the auspices of the European Union and transferring the Community's legal personality to the Union.

Inter-governmentalism and supra-nationalism

A basic tension exists within the European Union between inter-governmentalism and supra-nationalism. Inter-governmentalism is a method of decision-making in international organisations where power is possessed by the member-states and decisions are made by unanimity. Independent appointees of the governments or elected representatives have solely advisory or implementational functions. Inter-governmentalism is used by most international organisations today.

An alternative method of decision-making in international organisations is supra-nationalism. In supra-nationalism power is held by independent appointed officials or by representatives elected by the legislatures or people of the member states. Member-state governments still have power, but they must share this power with other actors. Furthermore, decisions are made by majority votes, hence it is possible for a member-state to be forced by the other member-states to implement a decision against its will.

Some forces in European Union politics favour the intergovernmental approach, while others favour the supranational path. Supporters of supra-nationalism argue that it allows integration to proceed at a faster pace than would otherwise be possible. Where decisions must be made by governments acting unanimously, decisions can take years to make, if they are ever made. Supporters of inter-governmentalism argue that supra-nationalism is a threat to national sovereignty, and to democracy, claiming that only national governments can possess the necessary democratic legitimacy. Inter-governmentalism is being favoured by more Eurosceptic nations such as the United Kingdom, Denmark and Sweden; while more integrationist nations such as the Benelux countries, France, Germany, and Italy have tended to prefer the supranational approach.

The European Union attempts to strike a balance between the two approaches. This balance however is complex, resulting in the often labyrinthine complexity of its decision-making procedures.

Supranationalism is closely related to the inter-governmentalist vs. neofunctionalist debate. This is a debate concerning why the process of integration has taken place at all. Inter-governmentalists argue that the process of EU integration is a result of tough bargaining between states. Neofunctionalism, on the other hand, argues that the supranational institutions themselves have been a driving force behind integration.

Main policies

As the changing name of the European Union (from European Economic Community to European Community to European Union) suggests, it has evolved over time from a primarily economic union to an increasingly political one. This trend is highlighted by the increasing number of policy areas that fall within EU competence: political power has tended to shift upwards from the member states to the EU.

This picture of increasing centralisation is counter-balanced by two points.

First, some member states have a domestic tradition of strong regional government. This has led to an increased focus on regional policy and the European regions. A Committee of the Regions was established as part of the Treaty of Maastricht.

Second, EU policy areas cover a number of different forms of co-operation.

* Autonomous decision making: member states have granted the European Commission power to issue decisions in certain areas such as competition law, State Aid control and liberalisation.
* Harmonisation: member state laws are harmonised through the EU legislative process, which involves the European Commission, European Parliament and Council of the European Union. As a result of this European Union Law is increasingly present in the systems of the member states.
* Co-operation: member states, meeting as the Council of the European Union agree to co-operate and co-ordinate their domestic policies.

The tension between EU and national (or sub-national) competence is an enduring one in the development of the European Union.

All prospective members must enact legislation in order to bring them into line with the common European legal framework, known as the Acquis Communautaire. (See also European Free Trade Association (EFTA), European Economic Area (EEA) and Single European Sky.)

EU AND PAK:

The country managed to achieve substantial economic progress since independence, Pakistan faced lack of sound economic management and political instabilities during most of the 1990s. This resulted in slow growth, a worsening fiscal deficit and a precarious balance of payments situation. In October 2000, under the military government and in co-operation with the IMF, Pakistan initiated a far-reaching macroeconomic stabilisation and restructuring programme. The macroeconomic situation has since improved significantly, in particular related to the fiscal deficit, official reserves and inflation. Trade performance has increased significantly. However, progress in the social sectors has been largely neutralised by high population growth. There has been no notable reduction in poverty levels.

There has been no notable reduction in poverty levels. The available data imply that roughly one third of the population is affected, with poverty rising relatively faster in urban areas. Poor access to basic social services and lack of good governance are cited as underlying reasons for this development. Given low growth in real per capita income in recent years, inequality has risen.

Review of EU/EC-Pakistan relations

Exceptional circumstances called for a response from the EU commensurate to the risk at stake which would make a significant and visible engagement with Pakistan, both in political and economic terms.


The GAC of 8 October 2001 concluded that the dialogue with Pakistan, following the 25 September Ministerial Troika visit to Islamabad, will be further developed. The Council invited the Commission to examine ways to reinforce Community assistance to Pakistan.

A number of actions have been prepared which form part of the EU/EC response to the current crisis, with the overall aim to contribute towards stability in Pakistan and the surrounding region.

Measures include resumption an upgrading of political dialogue, signature of a 3rd Generation Co-operation Agreement, a preferential trade package, as well as additional development aid and form part of a larger EU effort to engage Pakistan following the country’s decision to support the international coalition against terrorism.


Signature of 3rd Generation Agreement

By a decision of 15 July 1996, the Council authorised the Commission to open negotiations with the Islamic Republic of Pakistan with a view to concluding a 3rd Generation Cooperation Agreement and adopted directives to that end.

Negotiations started in December 1996 but turned out to be protracted, the text was finally initialled on 22 April 1998.

Signature was postponed repeatedly because of Pakistan’s nuclear testing, human rights abuse, the Kargil fighting and finally following the military take-over on 12 October 1999. The new Agreement contains a clause calling for respect for human rights and democratic principles as its basis .

Signature of the new Agreement took place on 24 November 2001 in Islamabad with President Musharraf during a visit by PM Verhofstadt and President Prodi. A Joint Statement was issued on the occasion in which Pakistan reiterated its firm commitment to return to democratic government according to the "roadmap" proposals presented by President Musharraf on August 14, 2001.

This is a non-preferential Agreement and has no financing protocol. Beyond clauses on commercial, economic and development cooperation the new Agreement features a Joint Declaration on Intellectual, Industrial and Commercial Property and an undertaking by the Islamic Republic of Pakistan to conclude readmission agreements with the Member States of the European Union. The Commission obtained a negotiating mandate on readmission from the Council on 18 September 2000 and is keen to launch these negotiations as soon as possible.

The new Agreement stipulates that a Joint Commission should be set up, to meet on an annual basis, alternately in Brussels or Islamabad. The last meeting of the Joint Commission under the old agreement took place in 1996 in Brussels.

Trade

The EU is Pakistan’s largest trading partner. In 2002 the EU accounted for 22% (EUR 5 billion) of Pakistan’s total trade, i.e. 27% (EUR 2,8 billion) of Pakistan’s exports and 17% (EUR 2,1 billion) of its imports. Pakistan only accounts for 0,3% of EU exports and 0,2% of EU imports. In 2002 EU imports from Pakistan grew with 3,1%. Cotton, textiles, garments and leather goods account for approximately 75 % of Pakistan’s exports to the EU. For the EU, the major export items are chemicals, transport equipment and machinery.

After the events of 11 September 2001, the EU granted Pakistan a comprehensive package of trade preferences. Measures include 1) inclusion of Pakistan in the GSP special incentive regime for combating drug trafficking, which resulted in zero tariffs for Pakistan exports to the EU; and 2) a bilateral MoU under which Pakistan received a quota increase of 15% for textiles and clothing in return for lowering its import duties.

Development/Economic Co-operation

Under EC-Pakistan development co-operation, priority is given to poverty alleviation and social sector development, in particular primary education and health care. Projects currently under implementation.

Poverty reduction and eradication as well as linking trade with development through furthering Pakistan’s integration in the world economy are key objectives of the 2002-2006 EC Country Strategy Paper for Pakistan. The EC proposes two priority areas for co-operation with Pakistan during the reference period, which together would account for approximately 88 % of available resources from the multi-annual Asia budget allocation:


1. Human development in the education sector with focus on poverty reduction, since education plays a strategic role in poverty alleviation and economic development (80 %). A sector programme (which would also place great emphasis on improving good governance and accountability in the provision of educational services) would be considered as the cornerstone for the EC’s interventions in this area.

2. Trade development and promotion of business and institutional links (8 %). The key objective here is to enhance co-operation in the economic field, which should contribute to the creation of income and employment as well as poverty alleviation.

In response to the crisis in the region, Commission services were asked to provide an aid package which could both have a quick economic impact and meet overall EC development policies. With this objective in mind, an additional € 50 M were earmarked for 2002 from the Asia budget. The funds will be provided as quick-disbursing budgetary support under a Financial Services Sector Reform Programme aiming to assist the reform and expansion of financial services in Pakistan. Further measures included accelerated disbursement of € 31 million under the ongoing Social Action Programme (SAP) and commitment of a € 22.9 million project aimed at strengthening livestock services.

Sectoral agreements


1.Agreement for Commercial, Economic and Development Co-operation Between the EEC and Pakistan (ref.: OJL 108/86 p.1). This agreement dates from July 1985, and builds on the 1976 trade co-operation agreement.


2.Cooperation Agreement between the European Community and the Islamic Republic of Pakistan on Partnership and Development. This new 3rd Generation Cooperation Agreement was signed on 24 November 2001 but has not yet entered into force.

3.Agreement between the EEC and Pakistan on Trade in Textile Products

4.Agreement in the Form of Exchange of Letters – an amendment to the above textile agreement (ref.: OJL 94/95 p.306), taking account of the 1994 EU enlargement.

5.Memorandum of Understanding between the European Community and the Islamic Republic of Pakistan on arrangements in the area of market access for textile and clothing products initialled in Brussels on 15 October 2001.