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Chapter Fifteen:
The Political Economy of the European Union
True/False Questions:
1) The European Union (EU) has enacted legislation to establish a single market
with about 100 billion consumers.
2) The European Union legislation allows for a free movement of people, goods,
services and capital among its country members.
3) Bulgaria and Romania are the newest members of the EU.
4) The Treaty of Rome was a papal document that blessed the original formation of
the European Union.
5) Among the members of the EU are Austria, Denmark, and Ireland.
6) The 2000 Treaty of Nice provides a road map for the enlargement of the Union
and in 2004 the EU admitted as may as 10 new members, including Cypress and
Slovenia.
7) Europeans labeled many of their economic problems in the 1970’s and 1980’s by
a disease name, “Eurosclerosis.”
8) The EU took two approaches to the removal of internal barriers to trade:
harmonization and standardization.
9) The members of the EU have coordinated and brought into line their various tax
and fiscal approaches.
10) The Maastricht Treaty is an example of the total harmonization of the European
Union since all nations that signed the timetable for a common European currency
supported all of its provisions.
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11) Six member states agreed to establish a joint defense policy.
12) One of the strongest supporters of the Maastricht Treaty has been Great Britain.
13) The European Commission is located in Berlin.
14) Political integration is less difficult than monetary union.
15) There are four principal institutions of the European Union that include the
European Parliament and the European Court of Justice.
16) The European Commission has twenty commissioners who are obliged to serve
the interests of their own countries first and the Union second.
17) Belgium, Greece, Hungary and Portugal have the largest voting weights on the
Council of Ministers.
18) The Council of Ministers is the principal legislative body of the European Union.
19) The Council of Ministers can take three types of actions, such as regulations, that
are legally binding on the member states and are enforced by the Commission.
20) The European Parliament has 785 members directly elected by voters in the
member states for five-year terms.
21) The European Court of Justice can make decisions by majority vote, but
dissenting opinions are not issued.
22) The EU has four basic procedures—consultation, co-decision, assent, and dissent.
23) In both the USA and EU, the vast majority of the antitrust enforcement is done
through private litigation.
24) Antitrust enforcement in the EU is done by the DG for competition.
25) Mergers are regulated by the European Commission that bases its decisions on
competition and shareholder value.
26) State-owned monopolies are a thing of past history within the European Union.
27) Compared to Japan and the U.S., the EU states provide considerably more
subsidization for their firms.
28) There is no monitoring of state-aid; it is a private matter in each country.
29) One reason that labor costs are high in the EU is that the labor force is well
educated and highly skilled.
30) Workers in both France and Germany worked much longer hours than their
counterparts in the US.
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Multiple Choice Questions:
31) The European Union (EU) has enacted legislation establishing a single market to
serve:
a) About 500 million consumers.
b) About 240 million people.
c) About 170 million citizens of the 15-national countries.
d) Over one billion citizens in the 15-nations comprising EU.
32) All of the following nations are members of the European Union except:
a) Belgium.
b) Spain.
c) Norway.
d) Sweden.
33) Which of the following countries has had the voters reject membership in the EU
twice?
a) Luxembourg
b) Norway
c) Portugal
d) Italy
34) When did the Europeans recognize the need to increase trade and encourage
political cooperation?
a) After World War I
b) After World War II
c) The start of Third Reich
d) After Vietnam
35) VAT stands for what?
a) Value Attendance Tariff
b) Value Added Tax
c) Victory At Tunis
d) None are correct
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35) What two approaches did the EU take to remove the internal barriers to trade?
a) Harmonization and mutual recognition
b) Harmonization and differentiation
c) Mutual respect and total sameness
d) State aids and deliberation
37) Through the Maastricht Treaty, the EU has agreed to:
a) Establish the principle that each country in the EU would keep its currency and
central bank.
b) Leave each country the freedom to determine its exchange rate for its currency.
c) Allow each country to decide the convertibility of its currencies in terms of
international trade.
d) Establish a common currency and an independent central bank.
38) Which of the following is not one of the principal institutions of the European
Commission?
a) Council of Advisors
b) Council of Ministers
c) European Parliament
d) European Court of Justice
39) The Maastricht Treaty was signed in what year?
a) 1992
b) 1945
c) 2000
d) 1996
40) Who elects the members of the European Parliament?
a) The voters of all the member nations vote for all representatives
b) Voters in the member states
c) The Court appoints the representatives
d) The Commission
41) What committee represents labor, business, farmers, trades and other interests?
a) Political and Labor
b) Economic and Human Resources
c) Economic and Social
d) Labor and Social
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42) The European Court of Justice is located where?
a) London
b) Luxembourg
c) Paris
d) Brussels
43) The Economic and Monetary Union is patterned after which country’s central
bank?
a) Sweden
b) United Kingdom
c) France
d) Germany
44) What constitutes the centerpiece of competition policy?
a) Antitrust law
b) Social law
c) Social justice law
d) None of the above is the centerpiece
45) __________ are subsidies paid by member state governments to industries or
government-owned companies.
a) Local aid
b) State subsidies
c) State grants
d) EU loans
46) What document provides a vision for the free circulation of labor and the rights to
fair wages, improvement of living and working conditions, social security, free
association and collective bargaining, vocational training and education, equal
treatment for men and women, information, consultation and participation for
workers, health protection and safety in the workplace, protection for children
adolescents, and the elderly and protection for the disabled?
a) Economic Charter
b) Fairness Charter
c) Social Democracy Charter
d) Social Charter
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47) Compared to Europe, in the USA:
a) Workweeks are longer.
b) Paid vacations are shorter.
c) Labor empowerment and protection is weaker.
d) All the above are valid observations about the USA.
48) According to the OECD report, on an average Americans worked ____ hours in
2003.
a) 1500
b) 1340
c) 1260
d) 1777
49) In terms of nonmarket issues, which of the following is not seen as a problem at
the EU level?
a) Further political integration
b) Tax policies to attract business
c) Further reforms of the common agricultural policy
d) Defense
50) What is the largest national interest organization in the EU that represents large
companies?
a) European Roundtable of Industrialists
b) Commerce United
c) Business of the EU
d) Corporate Industrialists
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Essay and Review Questions:
1) Many students of international business do not understand the concept of the
European Union, its components, the basic characteristics of its nation members
or the demographics thereof. You have been asked to explain the EU. Write the
outline of your lecture, giving some examples of the importance of the EU to the
USA.
2) Trace the evolution of the European Union from its inception after World War II
to the present. Include in your essay the origins of the Single European Act
(SEA), its mandates, and the approaches taken by the EU to remove the internal
barriers to trade.
3) Write a brief description of the functions of each of the four principal institutions
of the European Community. Describe the structure of each in terms of
organization and membership among the different member countries.
4) The European Union’s nation members have agreed on specific policies to govern
and/or regulate certain aspects of their economies and politics. Write detailed
notes on each of the following policies. Give examples and outline any issues still
under debate.
5) What political, social, economic, and organizational impacts will new member
admittance have on the existing members of the EU? How would you suggest that
the new members be integrated into the existing structure? Are you for the
expansion of the EU? Why or why not?
6) You are a member of the United Kingdom’s delegation of European Union
matters. How would you describe the positions of your country and why it has
taken those positions? Do you think that the United Kingdom will continue to be a
member and why or why not? Do you think the EU will be able to accomplish its
goals with contention from member countries?
7) Compare and contrast the institutions of the EU with the American political
system. Be specific and use relevant examples in your analysis.
8) Describe, discuss, analyze and critique the case of Aldeasa and the EU Duty Free
Abolition (A).
9) What are the key issues in the case of The European Union Carbon Tax and The
European Union Data Protection Directive? Compare and contrast the two cases.
10) Discuss and analyze the role of the emerging economic blocks such as the EU on
the world economy as well as what the future might look like.