Maastricht agreement and EU creation. European Free Trade Association (EFTA).

Date: 2015-10-07; view: 762.

The Maastricht Treaty (formally, the Treaty on European Union or TEU) was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands. On 9–10 December 1991, the same city hosted the European Council which drafted the treaty. Upon its entry into force on 1 November 1993 during the Delors Commission, it created the European Union and led to the creation of the single European currency, the euro. The Maastricht Treaty has been amended by the treaties of Amsterdam, Nice and Lisbon. See also Treaties of the European Union.

The treaty led to the creation of the euro, and created what was commonly referred to as the pillar structure of the European Union. The treaty established the three pillars of the European Union — the European Community (EC) pillar, the Common Foreign and Security Policy (CFSP) pillar, and the Justice and Home Affairs (JHA) pillar. The first pillar was where the EU's supra-national institutions — the Commission, the European Parliament and the European Court of Justice — had the most power and influence. The other two pillars were essentially more intergovernmental in nature with decisions being made by committees composed of member states' politicians and officials.

All three pillars were the extensions of pre-existing policy structures. The European Community pillar was the continuation of the European Economic Community with the "Economic" being dropped from the name to represent the wider policy base given by the Maastricht Treaty. Coordination in foreign policy had taken place since the beginning of the 1970s under the name of European Political Cooperation (EPC), which had been first written into the treaties by the Single European Act but not as a part of the EEC. While the Justice and Home Affairs pillar extended cooperation in law enforcement, criminal justice, asylum, and immigration and judicial cooperation in civil matters, some of these areas had already been subject to intergovernmental cooperation under the Schengen Implementation Convention of 1990.

The creation of the pillar system was the result of the desire by many member states to extend the European Economic Community to the areas of foreign policy, military, criminal justice, judicial cooperation, and the misgiving of other member states, notably the United Kingdom, over adding areas which they considered to be too sensitive to be managed by the supra-national mechanisms of the European Economic Community. The compromise was that instead of renaming the European Economic Community as the European Union, the treaty would establish a legally separate European Union comprising the renamed European Economic Community, and the inter-governmental policy areas of foreign policy, military, criminal justice, judicial cooperation. The structure greatly limited the powers of the European Commission, the European Parliament and the European Court of Justice to influence the new intergovernmental policy areas, which were to be contained with the second and third pillars: foreign policy and military matters (the CFSP pillar) and criminal justice and cooperation in civil matters (the JHA pillar).

In the 50th years on the basis of foundation agreements 3 European communities (respectively, ECSC, EEC and Euratom) which represented the integration associations personifying lines both of interstate, and supranational character were created. The new law and order which as wrote down in one of the decisions Court of the European communities, it can't be identified neither with national, nor with international law is embodied in these communities. EP is a special independent legal system.

The Maastricht criteria (also known as the convergence criteria) are the criteria for European Union member states to enter the third stage of European Economic and Monetary Union (EMU) and adopt the euro as their currency. The four criteria are defined in article 121 of the treaty establishing the European Community. They impose control over inflation, public debt and the public deficit, exchange rate stability and the convergence of interest rates.

1. Inflation rates: No more than 1.5 percentage points higher than the average of the three best performing (lowest inflation) member states of the EU.

2. Government finance:

Annual government deficit:

The ratio of the annual government deficit to gross domestic product (GDP) must not exceed 3% at the end of the preceding fiscal year. If not, it is at least required to reach a level close to 3%. Only exceptional and temporary excesses would be granted for exceptional cases.

Government debt:

The ratio of gross government debt to GDP must not exceed 60% at the end of the preceding fiscal year. Even if the target cannot be achieved due to the specific conditions, the ratio must have sufficiently diminished and must be approaching the reference value at a satisfactory pace. As of the end of 2010, only four EU member states, Poland, Luxembourg, Finland and the Czech Republic, still meet this target.

3. Exchange rate: Applicant countries should have joined the exchange-rate mechanism (ERM II) under the European Monetary System (EMS) for two consecutive years and should not have devalued its currency during the period.

4. Long-term interest rates: The nominal long-term interest rate must not be more than 2 percentage points higher than in the three lowest inflation member states.

The purpose of setting the criteria is to maintain the price stability within the Eurozone even with the inclusion of new member states.

The process of ratifying the treaty was fraught with difficulties in three states. In Denmark, the first Danish Maastricht Treaty referendum was held on 2 June 1992 but a shortfall of fewer than 50,000 votes resulted in the treaty not being ratified. After the failure, alterations were made to the treaty through the addition of the Edinburgh Agreement which lists four Danish exceptions. The treaty was eventually ratified the following year on 18 May 1993 after a second referendum was held in Denmark.

In September 1992, a referendum in France only narrowly supported the ratification of the treaty, with 51.05% in favour. Uncertainty over the Danish and French referendums was one of the causes of the turmoil on the currency markets in September 1992, which led to the UK pound's expulsion from the Exchange Rate Mechanism.

In the United Kingdom, an opt-out from the treaty's social provisions was opposed in Parliament by the opposition Labour and Liberal Democrat MPs and the treaty itself by the Maastricht Rebelswithin the governing Conservative Party. The number of rebels exceeded the Conservative majority in the House of Commons, and thus the government of John Major came close to losing theconfidence of the House.

The European Free Trade Association (EFTA) is a free trade organisation between four European countries that operates in parallel with – and is linked to – the European Union (EU). The EFTA was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable or unwilling to join the then-European Economic Community (EEC) which has now become the EU. The Stockholm Convention, establishing the EFTA, was signed on 4 January 1960 in the Swedish capital by seven countries (known as the "outer seven").

Today's EFTA members are Liechtenstein, Iceland, Norway and Switzerland, of which the latter two were founding members. The initial Stockholm Convention was superseded by the Vaduz Convention, which enabled greater liberalisation of trade among the member states.

EFTA states have jointly concluded free trade agreements with a number of other countries. Three of the EFTA countries are part of the European Union Internal Market through the Agreement on a European Economic Area (EEA), which took effect in 1994; the fourth, Switzerland, opted to conclude bilateral agreements with the EU. In 1999, Switzerland concluded a set of bilateral agreements with the European Union covering a wide range of areas, including movement of people, transport, and technical barriers to trade. This development prompted the EFTA states to modernise their Convention to ensure that it will continue to provide a successful framework for the expansion and liberalization of trade among themselves and with the rest of the world.

British reaction to the creation of the EEC was mixed and complex. Britain was also preoccupied with the Commonwealth, which, at the time of EFTA's formation, was in transition. Britain therefore brought together several countries, including some bordering the EEC, to form the European Free Trade Association soon after the establishment of the six-nation EEC (France, West Germany, Italy, Belgium, Luxembourg, and the Netherlands).

On 4 January 1960, the Treaty on European Free Trade Association was initialled in the Golden Hall of the Prince's Palace of Stockholm. This established the progressive elimination of customs duties on industrial products, but did not affect agricultural products or maritime trade.

The main difference between the early EEC and the EFTA was the absence of a common external customs tariff, and therefore each EFTA member was free to establish individual customs duties against trade with non EFTA countries.

Despite this modest initiative, the financial results were excellent, as it stimulated an increase of foreign trade volume among its members from 3.5 to 8.2 billion US dollars between 1959 and 1967. This was rather less than the increase enjoyed by countries inside the EEC.

After the accession of Denmark and the UK to the EEC, EFTA began to falter. For this reason most countries eased or eliminated their trade tariffs in preparation to join the EEC, but experienced declining revenue which reduced the importance of EFTA. Four members remain: Switzerland, Norway, Liechtenstein and Iceland. Iceland applied for EU membership in 2009 due to the 2008–2012 Icelandic financial crisis.

The founding members of EFTA were Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom. During the 1960s these countries were often referred to as the Outer Seven, as opposed to the Inner Six of the then-European Economic Community (EEC).

Finland became an associate member in 1961 (becoming a full member in 1986) and Iceland joined in 1970. The United Kingdom and Denmark joined the EEC in 1973, and hence ceased to be EFTA members. Portugal also left EFTA for the European Community in 1986. Liechtenstein joined in 1991 (previously its interests in EFTA had been represented by Switzerland). Austria, Sweden and Finland joined the EU in 1995 and thus ceased to be EFTA members.

Twice, in 1973 and 1995, Norway has tried to join the EU (still the EEC in 1973) and by doing so, leave the EFTA. Both times, membership of the EU was rejected in national referenda, keeping Norway in the EFTA. Iceland currently is in negotiations as a candidate for EU membership. If they were to complete negotiations and all countries ratified the accession treaty, they would leave the EFTA and join the EU.