European Business Culture – Flashcards
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Objective of the EU?
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1. Rebuilding powerful economies in the long-term so as to become again a big power in international economy. 2. Fight against the progress of soviet communists.
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Which model for the EU?
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The "United States" of Europe, expression coined by Winston Churchill in his September 1946 speech in Zurich.
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Treaty of London
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First step in forming EU. May 5th 1949 signed by all 10 countries (Belgium, Denmark, France, Ireland, Italy, Luxembourg, Netherlands, Norway, Sweden & UK) founding the Council of Europe.
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Founding Fathers
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Winston Churchill: British prime minister (1940-45, 1950-55), Robert Schuman: lawyer and French foreign minister (1948-1952), Jean Monnet: top advisor to French government main inpspiration behind Schuman declration, Konrad Adenauer: first chancellor of the Federal Republic of Germany whose foreign policy was based on reconciliation with France.
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Schuman declaration
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Birth of the EU. Presented by Robert Schuman on May 9 1950. Proposed cration of the European Coal and Steel Community ECSC (pooling coal and steel production as underlying assumption was that a joint control of this industrial production was the best solution to eliminate war).
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6 founding members of ECSC
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France, West Germany, Italy, Netherlands, Belgium and Luxembourg (British was against)
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Jean Monnet Quote (ECSC)
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"Our community is not a coal and steel producers' association. It is the beginning of Europe."
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Underlying principle of the EU
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Facilitating the emergence of a regional open market, stimulation trade and competition. Move form a fragmented market (national/home markets) to an integrated single market fostering economic relationships/trade but also the circulation of people.
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Overview of puropse of a treaty
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EU is based on the rule of law, every action taken by the EU is founded on treaties that have been approved democratically by all EU members. A treaty is a binding agreement between EU members. Treaties are amended to prepare for new member counties and to introduce new areas of cooperation.
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Treaty of Paris
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aka ECSC. Signed April 18 1951 (expired July 23 2002). Objectives: producing peace through economic stability. First step towards a series of institutions.
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Treaties of Rome
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aka EEC and Euratom treaties. Signed March 25 1957 (same 6 countries) entered into force January 1 1958. Objectives: to set up the European Economic Community and the European Atomic Energy Community. Proposing... the establishment of a customs unions, the creation of a common market of goods, workers, services and capital for EEC's members, the creation of common transport and agriculture policies and a European social fund. The European Commission was established.
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Merger treaty-Brussels treaty
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Signed April 8 1965 entered into force July 1 1967. Abrogated by the Amsterdam treaty in 1997. Combined ECSC-EURATOM-EEC into a single institutional stucture. Regarded as the real beginning of "modern European Union"
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Single European Act
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Signed February 17/28 1986, entered into force July 1 1987. First major revision of the Treaty of Rome: policy and law discrepancies between member states had to be addressed to really enable free trade. Objectives: establishing a single market by December 31 1992; political cooperation; collaborative legislative process to harmonise laws.
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Treaty on European Union (TEU)
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aka Maastricht Treaty. Signed February 7 1992, entered into force November 1 1993. Created European Union (EU) and led to the creation of the single European currency (the euro). Maastricht criteria: impose control over inflation, public debt and public deficit,exchange rate stability and the convergence of interest rates. Government debt < 60% of GDP; annual deficits <3% of GDP; inflation <1.5/average 3 best performing members.
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Treaty of Amsterdam
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Signed October 2 1997 entered into force Mary 1 1999. Changes to Treaty of Maastricht: simplifying the community treaties; issues about the necessity of an "institutional reform". Democracy, citizenship, rights of individuals, immigration. Increased power for the European Parliament; foreign policy. Enlargement issues.
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Treaty of Nice
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Signed February 26 2001 entered into force February 1 2003. Reform of the institutional structure of the EU to deal with enlargement. Streamlining of the decision making process to facilitate enlargement of the EU with eastern countires.
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Treaty of Lisbon (Reform Treaty)
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Signed December 13 2007 entered into force December 1 2009. Amendment of Maastricht and Rome treaties. Enhance the democratic process and improving consistency of action. Constitution for Europe: democracy, transparency, efficiency. EU is able to sign international treaties on its own name. Introduction and exit clause for members who would like to withdraw from the Union.
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Notion of "Democratic deficit"
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Lack of democratic legitimacy. Coined in 1979 because the European Parliament was not directly elected by the citizens of Europe. "cumbersome" governing mechanisms. Voting systemes and their reforms to address the problem.
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Impact of business
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"Cartelisation" of the economy is not possible anymore (Cartels and Nazi). Custom union: removing of internal tariffs and harmonizing of external tariffs; transport policies. Trade is in the internal market is facilitated and improved. Enhance competition and competitiveness. Fund transfers from more developed EEC regions to less developed ones fostering growth.
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European Institutional framework
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The Council of the European Union. The European Parliament. The European Commission. The European Council. The Court of Justice of the European Union. The Court of Auditors. The European Central Bank.
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Council of the European Union
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aka Council of Ministers. Main decision making body of the Union. Represents the member states. Presidency rotates between the states every six months. Composition: 28 national ministers. Votes: qualified majority or unanimity for sensitive topics (ex. enlargement, taxation, security). 352 votes in total; 260 to secure majority. "double majority" introduced from November 1 2014. Presidency: Italy since July 1 2014. Role: share the final say on laws with EP, coordinate broad economic policies, signs agreements, approves the budget. Crisicism: the Council can impose a policy on member states even if they did not vote for it in the council. Located in Brussels.
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The European Parliament (EP)
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Since 2012 president is Martin Schulz. 751 members (MEP) elected every 5 years by direct universal suffrage; it is the only direcly elected body of the Union: assembly of representatives of citizens. Shares the legislative and budgetary authority of the Union with the Council: ordinary legistative procedure, voting on the annual budget, some control over the Union's institutions; MEPs can give their consent on international agreements. "equal footing" in the Lisbon Treaty. Located in Strasbourg.
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The European Comission (EC)
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The only body that can propose legislation; responsible for drafting all law of the EU; uphold the laws; supranational. "Guardian of the Treaties" Composition: one appointee from each state (commissioners) + 1 President is nominated by the council and approved by parliament. The president is responsible for allocationg portfolios to the commissioners and can reshuffle or dismiss them if needed. Vote: qualified majority. Presidednt: Jean-Claude Juncker (since November 1 2014). Located in Brussels. National heads/leaders of government of the EU member states. Meets 4 times/year. Defines Union's policy agenda. President: Herman Van Rompuy.
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Court of Justice of the EU (CJEU)
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Responsible for interpreting EU laws and Treaties (ensures compliance in interpreting and applying the Treaties). Located in Luxembourg.
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Court of Auditors
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Ensure the funds from the EU budget have been correctly spent. Provides each financial year an audit report to the Council and the Parliament. Composition: one member from each state; appointed by the Council eveyr 6 years. President: Vitor Manuel Da Silva Caldeira.
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The European Central Bank (ECB)
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Became a full institution with the Lisbon treaty in 2009. Central bank for the Eurozone (18 countries use the Euro). Defines and implements the monetary policy of the Eurozone with the main objective of maintatining price stability. Has the power to authorise the issue of the Euro banknotes. ECB+national central banks= European System of Central Banks (ESCB). Governed by a board of nationalcentral bank governrs + Executive Board & President. Located in Frankfurt. President: Mario Draghi since November 1 2011.
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Brentton woods agreements
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July 22 1944 putting in place the Gold Standard monetary system... in which only the US dollar is convertible into gold and other currencies are indexed to the dollar. Collapse of Bretton Wood system in 1971.
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European Monetary System (EMS)
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Created in March 1979, backbone of the monetary integration; all currencies of Member States (except the UK) participated. Designed to bring more monetary stability and as an anti-inflationary tool.
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EMU 3 stage approach
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Stage 1: free movement of capital between member states started July 1 1990. Stage 2 convergence of MS economic policies and more cooperation between MS national central banks... in order to prepare the introduction of a single currency started January 1 1994. Stage 3: progressive introduciton of the single curency (the euro) and implemtation of a common monetary policy under ECB since January 1 1999.
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Adoption of Euro
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May 1998: 11 member states are eligible for the adoption of the Euro; Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Finland. January 1 1999: birth of the Euro; setting up of ERM 2 as successor to ERM. January 2002: Euro notes and coins enter circulation in 12 member states. September 2000: Danes vote against the Euro; January 2001: Greece joins the Euro; September 2003: Sweden votes against the Euro.
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ERM 2
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helps non euro area countries to prepare themselves for entry in the Euro (>=2 years) it is the framework that should help prevent excessive fluctions and ensure stability & sustainable economic convergence. June 2004: Estonia, Lithuania and Slovenia join ERM 2 in June 2004. Cyprus, Latvia and Malta join ERM 2 in April 2005. Slovakia joins ERM 2 in November 2005.
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European Business Culture based on..
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Democracy and justice. Liberalisation and deregulation, fair competition. High standards Education, R&D, technology. Strong social models. Deep integration of decision making.
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EBC creates..
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Freedom of movement for EU citizens enabling them to travel, live and work in any other EU country, creating job opportunities, more flexibility and higher wages in some cases. The free flow of capital (integrated capital market) fostering investment. The free movement of services and goods, giving more choice and lower prices to citizens and opening new markets for businesses.
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Globalization
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a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through th emovement of goods, services and capital across borders. The term sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders. There are also broader cultural, political, and enviromental dimensions of globalization.
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What is speeding up globalization?
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Freedom of trade: internationalisation-transnationalism-globalization. Improvement in transportation. NTIC and the new practices they spread. Innovation. Reorganisation of the international division of labour.
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Globalisation implies
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Increasing integration and interdependecny of economies around the world. The intesification of competition in domestic as well as in exports markets. Opening and blurring of national borders. Cultural and social convergence. Free trade. Free movement of capital, good and services. Elimination or significant decrease in tariffs, price controls. Privatisation of state-owned companies. Transformation of the traditional firm into a multinational corporation (MNC). They opearte in different countries to take advantage of different factors and to access new markets.
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Cost and Benefits of Globalisation
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Foreign investmet is fostered, trade is cheaper and more efficient, new market for goods and services created. BUT Rising of unemployment rates in some cases, trade deficits, foreign ownership of domestic assets, changes in the mode of government. Globalisation is taking place under international treaties: the World Trade Organisation (WTO).
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Free trade agreements
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EU is strong supporter. FTA already opeating with South Africa, Mexico, Chile, South Korea, Peru and Colombia. FTAs finalised but not in force with Central America, Singapore, Eastern Neighbourhood. FTAs under negotiation with Canada (CETA), India, ASEAN, Mercosur, Gulf Cooperation Council, ACP, Japan, Morocco, US (TTIP).
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The TTIP
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The Transatlantic Trade and Investment Partnership is a free trade agreement under negotiations between the EU and the US. Objective is to reduce unnecessary costs and administrative delays that come from regulation while keeping health and safety for consumers and enviroment protected. So it's not about deregulation. Main objective is to reduce regulatory barriers to trade between the EU and the US. Would imply cutting red tape and improving coordination betweent he EU and the US regulators. overall economic barriers between the EU and the US are quite low but still many things can be improved to reduce the cost of doing business across the Atlantic.
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Effects of regulations
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Barriers- regulations can block a foreign company from selling its products. Expenses- regulations can make it too expensive for a foreign product fo compete effectively on the market. Duplication- two different sets of costs to be able to sell products to both markets.
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Pharmaceutical industry in Europe (facts & figures)
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In 2012 it employed about 800,000 people and annual output was EUR 220 billion. In 2006 expenditure on R&D was 8.7 billion. 90% of this was sepnd in Germany, France, Sweden, Denmark, the UK and Spain. In 2010 Healthcare sector (pharmaceutical sector, medical devices and helath services) represented 9% of EU GDP.
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Some European-based pharmacetical companies
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GlaxoSmithKline (UK), Astra-Zeneca (UK-Sweden), Sanofi-Aventis (France), Bayer (Germany) *EEA-based: Roche, Novartis (Switzerland)
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Pharmaceutical industry global (facts & figures)
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EU-28 major world trader in medicical and pharmaceutical products in 2014 Total extra-EU trade: EUR 171.1 billion. Exports represent 2/3 of this amount. Trade balance excess 55.6 billion. Major trading partner: the US (Switzerland in EEA) Largetst exporters: Germany, Belgium, France and the UK Largest importers: Belgium, Germany, the Netherlands, Italy and UK
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EU pharmaceutical industry trade barriers
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registration costs, licensing, certification procedures. Extensively regulated considering 3 main underlying principles: Health and safety of the patients Manufacturing high-quality medicinal products Single EU market for pharmaceuticals that develops a strong and competitive industry.
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EU Patients facts & figures
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EU patrients pay only 11% of healthcare costs out of their pockets, which represent EUR 122 billion a year. Health expenditure/GDP is rising in EU. Functioning of the internal market, balance between cost-containment and pharmaceutical innovation is difficult to set
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Challenges for the European pharmaceutical industry
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Health threats, demographic change High R&D costs IPR, counterfeited medicines na dillegal distribution of medicines Increased competition in the global marketplace Ethical issues, "pharmacovigilance" Pricing/reimbursment
