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INTRODUCTION
Europe today consists of
the Member States of the European Union (EU),
the Member States of the European Free Trade
Area (EFTA), and the Central and Eastern European
States most of which were, until recently,
under the political, economic, and military
umbrella of the former Soviet Union.
This paper outlines what the potential corporate
investor or exporter of goods and services
must know of the EU and describes the general
aspects of doing business in France.
The
EUROPEAN UNION (EU)
The fifteen current
Member States of the EU are France, Germany,
the United Kingdom, the Netherlands, Spain,
Portugal, Belgium, Denmark, Greece, Luxembourg,
Italy, Ireland, Austria, Finland and Sweden.
The EU was initially called European Economic
Community (EEC). The basic principles of the
Economic Union, known as the "Four Freedoms",
set up a uniform economic area free from distortions
in competition and thus free from customs barriers
within the Member States. The "Four Freedoms"
are the free movement of goods, persons, services
and capital. The Treaty of Maastricht dated
February 7th, 1992 organized economic and monetary
union, unanimity in foreign policy and cooperation
in defense among the Member States. In May 1999,
the Treaty of Amsterdam added significant improvements
on social and employment matters, to the Treaty
of Maastricht.
The
EUROPEAN FREE TRADE AREA (EFTA)
The current Member
States of EFTA are, Iceland, Norway, Switzerland
and Liechtenstein. EFTA essentially creates
a "privileged" trade area and is not
in any sense an economic or political union.
This organization has nonetheless concluded
some conventions with EU, namely on jurisdiction,
free trade relationship (excepted Switzerland).
It is worth noting
that a number of current EEC Member States were
previously members of EFTA and that the extension
of the EU will probably lead to the disappearance
of the EFTA.
THE
FORTHCOMING ACCESSION OF THE CENTRAL AND EASTERN
EUROPEAN STATES
The accession of
new Member States will enhance the Union's international
influence. Although economic and political realities
in these countries are often very different,
the Union will certainly prove its ability to
merge the economic interests of nations with
a long common history of exchanges.
With accession of
Central and Eastern Europe countries, as well
as Malta, Turkey and Cyprus, the EU's population
could rise by 25% to 500 million but its total
GDP would grow no more than 5%.
The Copenhagen European
Council started the pre-accession process in
1993. Negotiations started in 1998 with a first
wave of 6 countries : Cyprus, Czech Republic,
Estonia, Hungary, Poland, Slovenia. This has
been followed by a second wave of 5 countries
: Bulgaria, Latvia, Lithuania, Romania, Slovakia.
The Copenhagen European
Council defined the criteria which applicants
would have to meet before joining the EU : Stability
of institutions guaranteeing democracy, existence
of a functioning market economy, adherence to
the aims of political/economic and monetary
union.
The PHARE program
is the pivotal financial instrument in the pre-accession
strategy. ECU 21 billion are to be provided
to the Central and Eastern European Countries
for the period 2000-2006. 30% are to be allocated
to the reinforcement of the applicant's administration
and institutions, 70% in investment financing.
Lately, the Berlin
European Council (March 1999) set up 2 pre-accession
instruments : A structural instrument (ISPA)
and an agricultural one (SAPARD). This European
Council decided to double pre-accession aid
from 2000.
TRANSATLANTIC
ECONOMIC RELATIONS
The EU and the U.S
are each other's single largest trading partner
: In 1997, they traded goods worth ECU 277.000
million, around 20% of their total world trade.
High added value goods like high-tech products
account for 20% of this transatlantic trade.
The EU and the U.S have by far the world's most
important bilateral investment relationship
and are each other's most important source and
destination for Foreign Direct Investment. 51%
of FDI stocks in the E.U originate in the U.S.
The WTO is the scene
where the EU and the U.S can exercise considerable
influence on global trade & investment (FDI).
In this context, the EU and the U.S have worked
together to conclude the Information Technology
Agreement and the Basic Telecommunication Services
Agreement, which together liberalize approximately
one trillion ECU in trade in goods and services
and most recently, the Financial Services Agreement.
Recently,
the EU and the U.S went further in their attempts
to enhance a closer economic co-operation. Despite
many efforts on both side, a number of barriers,
mainly of a non-tariff kind continue to hamper
Transatlantic Trade. It was with this mind that
the European Commission made a proposal in March
1998 on the creation of a New Transatlantic
Marketplace (NTM). This led the EU and the U.S
to agree to the launching of the Transatlantic
Economic Partnership (TEP) at the 18 May 1998
EU/U.S summit in London.
