Implications of Increased European Integration

POLITICAL AND ECONOMIC IMPLICATIONS FOR THE UNITED STATES OF INCREASED

This research examines the political and economic implications for the United States of increased European integration. European integration began a further giant step forward on 1 January 1992, when the Single Act of Luxembourg became effective. The Single Act provides for much greater economic integration of the 12 members countries of the European Community (EC); however, the Act also portends greater political integration in the future.

The EC has emerged as one of the three world economic powers, along with the United States and Japan. Non member states are apprehensive over the implications of both further economic and political integration of the EC. The EC has declared that the Single Act is not intended to create a fortress Europe. The statement is likely true on its face; however, the potential for the development of a more closed economic community is clearly present.1 An inability to reach agreement with the United States on agricultural subsidies, as an example, would not be as problematic to an EC characterized by complete economic integration, as it did to the organization in 1988 when it was confronted with such a situation. In such a situation, or in similar situations, the more than 320 Europeans might be inclined to freezeout the rest of the world, and thrive within their own circled wagons. The very thought of such a potential action

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t out, may be able to even more effectively restrict such actions subsequent to 1992the effective date for the Single Act. The Single Act is also intended to further the goal of political integration within the community states. This goal, however, will likely continue remain more elusive than full economic integration.16 In 1990, five of the member nations of the EC signed the Schengen Pact, where virtually all border controls (not just economic controls) between those nations would be eliminated as of 1 January 1992, along with the scheduled economic integration of the EC.17 The five nations are Belgium, France, Germany. Luxembourg, and the Nederlands. In late1990, a sixth nation, Italy, signed the Schengen Pact. Thus, a greater degree of integration will characterize the relationship between these six nations than will be characteristic of the EC as a __________ 16S. Tully, "Europe Hits the Brakes," Fortune, 17 December 1990, 132134, 136, 138. 17"Schengen Agreement," The Economist, 16 June 1990, 56, 5859. whole. This nation within a nation, so to speak, creates more complications for non member countries such as the United States. Although the EC has passed through many structural transitions,

Category: Foreign - I