Business advantage from the EU?
Yes or No?

By Nigel Benson (April 2007)

Do you feel that the EU has gained your company or has the open borders made it more difficult for you to act on the market? I know, it’s a though one! Some of you might say Yes, other might say No to the questions above. When some people win – other people will loose. It’s all about competition. But let us take a quick look at the EU, what is it really about?

The European Union is knowned to be the most successful example of economic integration. Integration which involves agreements among countries to establish links through the movement of goods, services, and factors of production across borders. Levels of integration include the free-trade area, customer union, common market and full economic union.

The EU has succeeded in eliminating most barriers to the free flow of goods, services, and factors of production. The EU also has made the progress toward the evolution of a common currency and central bank, which are fundamental requirements of an economic union. In America, NAFTA is paving the way for a hemispheric trade bloc. The benefits derived from economic integration include trade creation, economies of scale (lower production costs resulting from greater production for an enlarged market are called economies of scale), improved terms of trade, the reduction of monopoly power and improved cross-cultural communication.

However, a number of disadvantages may also exist. Most importantly, economic integration may work to the detriment of non-members by causing deteriorating terms of trade and trade diversion. In addition, no guarantee exists that all members will share the gains from integration. The biggest impediment to economic integration is nationalism. There is strong residence to surrendering autonomy and self-determinism to cooperative agreements. Of course we can’t forget the increased competition between companies which can force companies to move their production to countries with lower payments.

So the European Trade Union is rather an adventure, which the EU authorities try to regulate. There are many advantages as well as disadvantages of EU. We just have to be aware of using the EU opportunities most efficiently.