Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. CHAPTER 15 The European Union and Other Regional Trade Areas

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 2Models Federal Model. Free Trade Area: two or more countries agree to eliminate or phase out customs duties and barriers to trade among the member countries. Customs Union: there is free trade in all goods that come through union members. Common Market: common rules & currency. See the Commission of the European Communities v. Italian Republic (the “chocolate substitutes”) case.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 3Compatibility How can members of an FTA treat its members more favorably than other GATT/WTO members? Isn’t this practice discriminatory, and a violation of GATT?

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 4 European Union Treaty of Rome (1957) creates European Community. Single European Act (1987) set 1992 deadline of achieving single market. Maastricht Treaty (1993) created European Union and set path for monetary union.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 5 European Union Treaty of Amsterdam (1999), incorporated the principle of freedom of movement from the Schengen Agreement. Treaty Establishing a Constitution for Europe (2004), that was ultimately rejected.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 6 Structure of the EU Council of the EU, sits in Brussels, Belgium, the “capital” of the EU. The Commission of the EU is the executive body carrying out the decisions of the council. European Court of Justice in Luxembourg is the final arbiter of EU law. European Parliament’s members are elected by European citizens. European Central Bank.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 7 Monetary Union Criteria Budget deficit no greater than 3% of GDP. Public debt no greater than 60% GDP. Price stability (inflation controlled). Long term interest rates within 2% of the best 3 countries. Exchange rate stability

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 8 Harmonization: Directives and Regulations Treaty of Rome identifies four principal means: –A regulation shall have general application. –A directive shall be binding as to the result to be achieved. –A decision shall be binding upon those to whom addressed. –Recommendations and opinions have no binding force.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 9Privacy Directive on Privacy and Electronic Communication (2002) as well as data protection described in the case European Parliament v. Council of the European Union and Commission of the European Communities.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 10 Common Agricultural Policy (CAP) What is it? What conflicts have occurred? How are the goals described now? “transparency, quality and safety and a farm sector in tune with the environment and animal welfare.. A sustainable farm and food sector for the future” How does the expansion of the EU affect this?

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 11 National Farmer’s Union (France) The Commission adopted emergency measures to protect against BSE ( Bovine spongiform encephalopathy) or mad cow disease. The UK was temporarily prohibited from exporting beef to the Continent. The Court found that since there was a procedure in place to protect the public upon the resumption of exports. France could not invoke Article 30 to block imports.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 12Harmonization Harmonization by Enforcement of the EC Treaty. The EC can harmonize national laws that may be inconsistent with EU laws. The Commission is acting more and more like U.S. Executive Branch and courts, striking down legal barriers to free commerce. See the Commission of the European Commission v. Italian Republic case.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 13 Business Implications of the EU What are the ramification for business of the expansion of the EU? What impact does the trade friction between the U.S. and the EU have on business ventures?

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 14 Other Regional Trade Areas Mercosur: Argentina, Brazil, Paraguay, Uruguay. CAFTA-DR: Central America. Andean Common Market: Bolivia, Venezuela, Colombia, Ecuador, Peru.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 15 African trade areas (AEC, COMESA, SADC). Caricom: Caribbean Community. See the case Barbados Rediffusion Service Limited v. Mirchandani (2005). ASEAN: Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Myanmar, Laos, Cambodia, Vietnam. Arab League. Other Regional Trade Areas

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 16 Other Regional Trade Areas Commonwealth of Independent States Free Trade Area. Gulf Cooperation Council. Greater Arab Free Trade Area.