European Union (EU)

The European Union (EU) is a political and economic union comprising 27 European countries. Its primary objectives are to promote economic integration, political cooperation, security partnerships, and the protection of human rights among its member states.

🔹 Establishment and Evolution:

1951 – Establishment of the European Coal and Steel Community (ECSC)

🔹 Date of Establishment: 18 April 1951
🔹 Treaty Enforced On: 23 July 1952

🔹 Objectives:

• To establish peace between France and Germany after World War II
• To create joint control over the production of coal and steel
• To promote economic cooperation in Europe

🔹 Founding Members (6 countries):

1. France
2. Germany (then West Germany)
3. Italy
4. Belgium
5. Netherlands
6. Luxembourg

🔹 Significance:

• Reduced the possibility of war among member states by sharing control over strategic resources (coal and steel).

🔹 End of ECSC:

• The treaty was valid for 50 years and officially ended in 2002. Its functions were absorbed by the European Union.

1957 – Treaty of Rome and Establishment of the EEC

🔹 Treaty Name: Treaty of Rome
🔹 Date Signed: 25 March 1957
🔹 Came into Force: 1 January 1958

🔹 Founding Organizations:

1. EEC (European Economic Community) – For economic integration
2. EURATOM (European Atomic Energy Community) – For peaceful use of nuclear energy

🔸 Objectives:

• To create a Common Market among member countries
• Free movement of goods, services, capital, and people
• Elimination of trade barriers
• Coordination in economic and social policies

🔸 Founding Members (same 6 countries as ECSC):

1. France
2. Germany (West)
3. Italy
4. Belgium
5. Netherlands
6. Luxembourg

Journey from EEC to EU:

• In 1993, under the Treaty of Maastricht, the EEC was renamed as the “European Union (EU)”.

🔹 Date Signed: 7 February 1992
🔹 Date of Enforcement: 1 November 1993
🔹 Location: Maastricht, Netherlands

Key Features:

🔸 Introduction of a “Three-Pillar Structure”:

1. European Communities (EC): Policies related to economy, society, and environment
2. Common Foreign and Security Policy (CFSP)
3. Cooperation in Justice and Home Affairs (JHA)

🔸 Foundation for Economic and Monetary Union (EMU):

• This eventually led to the creation of the Euro currency, which came into circulation in 2002

🔸 Concept of Citizenship:

• Every citizen of a member country would also be considered a citizen of the EU
• This enabled free movement across Europe and expansion of political rights

🔸 Membership:

• Initially, there were 12 member countries
• With expansions over time, the number rose to 27 member countries by 2025
  (Note: The United Kingdom exited the EU in 2020 – commonly referred to as Brexit)

Adoption of the Euro as the Official Currency

🔹 Date: 1 January 2002
🔹 Context:

• The Euro was officially introduced as cash (banknotes and coins) in the member countries of the European Union (EU).
• It became the second most widely used currency in the world, after the US Dollar (USD).

Key Facts:

🔸 Foundation:

• The plan for the Economic and Monetary Union (EMU) was laid out under the 1992 Maastricht Treaty.
• The Euro was initially introduced in 1999 as a digital currency (for banking and accounting purposes), but it was launched as physical currency for the public in 2002.

🔸 Initial Adopting Countries (12 countries):

1. Austria
2. Belgium
3. Finland
4. France
5. Germany
6. Greece
7. Ireland
8. Italy
9. Luxembourg
10. Netherlands
11. Portugal
12. Spain

🔸 Eurozone:

• Refers to those countries that have adopted the Euro as their official currency.
• As of 2025, 20 EU member states are part of the Eurozone.

🔸 Supervision of the Euro:

• Managed by the European Central Bank (ECB), which is headquartered in Frankfurt, Germany.

European Union

🔹 Member States (as of 2025):

• Total Members: 27
• Some key members: Germany, France, Italy, Spain, Poland, Netherlands, Sweden, Belgium, etc.
• (The United Kingdom exited the EU under Brexit in 2020)

🔹 Major Institutions:

1. European Commission – The executive body; proposes legislation.
2. European Parliament – Elected by EU citizens; participates in law-making.
3. European Council – The key decision-making body; includes heads of state/government.
4. Court of Justice of the EU – Interprets EU laws.
5. European Central Bank (ECB) – Controls the Euro currency and monetary policy.

🔹 Euro (€) Currency:

• Adopted by 19 countries (Eurozone)
• Second most widely used currency in the world
• Managed and regulated by the European Central Bank (ECB)

India-EU Relations

• Strategic Partnership: Since 2004
• Trade: The EU is India’s third-largest trading partner (approx. $70 billion trade volume)
• Dialogue: Ongoing negotiations on BTIA (Bilateral Trade and Investment Agreement)
• Cooperation Areas: Climate change, digital partnership, human rights, education, etc.

Challenges:

• Brexit: UK’s exit from the EU
• Rise of Nationalism: EU-skeptic sentiments in some member countries
• Immigration Crisis: Influx of refugees from Syria and African nations
• Internal Differences: Disagreements on financial, defense, and climate policies

Recent Developments (2024–25):

• Advancement of the Green Deal – Targeting a 55% reduction in carbon emissions by 2030
• Steps toward integrating the EU Digital Market
• Progress in India-EU trade agreement negotiations
• Coordinated sanctions on Russia in response to the Ukraine crisis

India-European Union (EU) Relations

• Historical Ties:
  In 1962, India established diplomatic relations with the European Economic Community (EEC), making it one of the first countries to do so.
• During the 5th India-EU Summit held in The Hague in 2004, the relationship was upgraded to a Strategic Partnership.

Trade Partnership:

• The European Union (EU) is India’s largest trading partner.
• India is the 9th largest trading partner of the EU.
• In 2023, India recorded a trade surplus with the EU.

Strategic Cooperation:

• Both sides share common interests in areas like security, renewable energy, climate change, and multilateralism.
  • For example, the India-EU Bilateral Dialogue focuses on counter-terrorism, cyber security, migration and mobility, maritime security, human rights, disarmament, and nuclear non-proliferation.
  • The EU's Indo-Pacific Strategy supports and strengthens India’s role in the Indo-Pacific region.
  • Both India and the EU advocate for reforms in multilateral institutions like the World Trade Organization (WTO).
  • Under the India-EU Clean Energy and Climate Partnership (2016), both sides are working to implement the Paris Agreement and promote clean energy cooperation.

Connectivity:

• Launched in 2021, the Connectivity Partnership aims to enhance cooperation in digital, energy, and transport sectors, as well as promote people-to-people ties.
  • Projects like the India-Middle East-Europe Economic Corridor (IMEC) are expected to strengthen trade and connectivity between India and the EU.

Benefits for India

Investment:

• The European Union (EU) is a major source of Foreign Direct Investment (FDI) in India.
  • Between April 2000 and December 2023, India received $107.27 billion in FDI from the EU.
  • The G-20’s Business 20 (B-20) Forum promotes trade and investment.

Boost to Exports:

• India can enhance exports to the EU in sectors like Information Technology (IT), pharmaceuticals, textiles, and agriculture.
  • For instance, India-EU bilateral trade in services witnessed a 48% increase between 2019 and 2022.

Security and Defence:

• European defence companies can contribute to the modernization of India’s defence sector under the ‘Make in India’ initiative.
  • A recent example is the manufacturing of Airbus C-295 aircraft in India.

Technology and Innovation:

• Collaboration in Artificial Intelligence (AI) and digital transformation will accelerate India’s technological growth.
  • Example: The India-EU Trade and Technology Council, established in 2022, is a strategic coordination platform to address challenges related to trade, technology, and security.

Importance of India for the European Union

Access to a Large Market:

• India can become a significant trading partner for the EU and offers a rapidly growing large market for EU products.
  • Example: In 2024, India and the European Free Trade Association (EFTA) signed the Trade and Economic Partnership Agreement (TEPA).
    • EFTA includes Iceland, Liechtenstein, Norway, and Switzerland.

Cultural and Educational Ties:

• India’s young and skilled workforce can meet Europe’s demand for trained professionals and promote academic collaboration between the two sides.

Geopolitical Cooperation:

• The EU can leverage India’s central role and growing capabilities in the Indo-Pacific region to strengthen its geopolitical presence in the Global South.

Security and Stability:

• India can help ensure security and stability in the Indian Ocean region, thereby safeguarding critical sea lines of communication (SLOCs) vital for Europe.
  • Notably, 35% of the EU’s trade with Asia passes through the Indian Ocean.

Challenges

1. Lack of Trade Diversification:

• The EU’s restrictive trade regime, Technical Barriers to Trade (TBT), and Sanitary and Phytosanitary (SPS) measures act as non-tariff barriers, hindering the expansion of bilateral trade.
  • Around 90% of the EU’s total exports to India are concentrated in just 20 product categories.

2. EU’s Dependence on Chinese Imports:

• Since 2010, India’s share in EU imports has remained stable, whereas China’s share has increased significantly, reducing India’s trade advantage.

3. Delay in Free Trade Agreement (FTA) Negotiations:

• Differences over digital regulations, bilateral investment treaties, dispute resolution mechanisms, and investor protection have stalled progress.
  • From 2007 to 2013, India and the EU held negotiations on the Bilateral Trade and Investment Agreement (BTIA), which remained inactive until talks resumed in 2021.

4. Carbon Border Adjustment Mechanism (CBAM):

• India is concerned that the EU’s CBAM will create new trade barriers for its exports.
  • Under CBAM, energy-intensive exports from India to the EU would face an additional 25% tax.
  • According to the Centre for Science and Environment (CSE), this could impact 0.05% of India’s GDP.

5. Lack of Consensus:

• Disagreements on issues such as labour laws, human rights, and environmental standards hinder deeper EU investments in India.
  • The thinking and activism of Europe’s civil society may clash with India’s principle of strategic autonomy.
    • For instance, India’s restrictions on Amnesty International activities.

The Way Forward

1. Fast-Tracking the Free Trade Agreement (FTA):

• Negotiations on the India-EU FTA, Investment Protection Agreement, and Geographical Indications Agreement were revived in 2022.
  • These talks must be accelerated to unlock new trade and investment opportunities.

2. Improving Trade Processes:

• Clear tariff policies and regulations will enhance investor confidence.
  • Liberalizing imports and diversifying supply chains can boost trade.
    • For example, liberalization of public procurement in India can offer new investment opportunities for European companies in Indian infrastructure.
    • Public procurement refers to the government and its agencies purchasing goods and services from private companies.

3. Green Sector Cooperation:

• Sustainable development and energy transition can be promoted through trade and innovation.
  • Investments in green technologies and renewable energy can further strengthen trade relations.

4. Labour Policy:

• India has reformed its labour codes in line with international standards.
  • To make India-EU trade negotiations successful, attention must be paid to occupational safety and sustainable labour rights.
    • Occupational safety covers all aspects of physical, mental, and social health and safety at the workplace.

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