Term Paper on "What Do Countries Stand to Gain From the Common Market?"

Term Paper 5 pages (1600 words) Sources: 6 Style: MLA

[EXCERPT] . . . .

European Common Market

Benefits of Joining the Common Market in Europe

The European Union was created initially in 1993 as a means of uniting countries of Europe into a single market. Since then the EU has grown substantially, now encompassing 25 different European countries ("Europe on the Move"). Despite the massive growth of the common market, there remain some countries which have to this date have elected not to participate. The reason for this is that they feel that it would not be beneficial for them to do so at the present time. This paper aims to evaluate the benefits which the common market does in fact hold for different types of countries, both rich and poor. The paper argues that there are greater benefits to joining the common market for poor countries than for rich companies, due to the way in which the common market acts to reduce the poverty gap between countries.

Defining the Benefits

Romano Prodi of the European Commission defined the benefits of joining the European Union (EU) as "stability, prosperity, solidarity, democracy and freedom." When considering the different backgrounds from which the different countries of Europe have emerged it is clear that there are differences in the initial levels of these elements. For example the richer countries of Europe, such as the UK and France have enjoyed high levels of every one of these elements in recent centuries. While the joining of the common market may help to ensure that this will continue into the future, it is unlikely to bring immediate differences in the levels of any of these elements. In comparison, many of the poorer countries which have recently joined or are looking to join, the common market, have low levels of several of these elements. The poorer countries joining the European Union come from Central and Eastern Europe, and many of these countries were previously members of the Soviet bloc. It is the lack of each of these elements which characterizes many of these Eastern countries. The joining of the EU for these countries signifies not only greater long-term stability, but relatively immediate effects in terms of increasing prosperity and wealth. For this reason, it can be argued that these poor countries have far more to gain from joining the common market than richer countries such as those in Scandinavia.

The increased benefits gained by the poorer countries are not entirely without cost, however. The Eastern and Central European countries must be able to meet the strict legislative demands of the common market. As they begin with much lower levels of such legislation, it is likely to cause them greater financial cost at the outset (Schimmelfenig et al.: 29). Most of the poorer countries so far have considered this a necessary expense to ensure their long-term growth.

Working in Different Countries

The joining of the European Union gives individuals who hold an EU passport employment rights across all of the member countries. This entitles the holder to not only work in another country of their choosing, but also affords them the same rights and opportunities while working as those native to the country. This is beneficial to individuals of poorer countries, particularly skilled workers, as it allows them to seek employment in countries in which the wages are higher and the standard of living better. It may also be considered beneficial to the richer companies, as it enables them to easily attract and integrate a wide variety of skilled workers which they may not have within their own country's population ("Europe on the Move").

There are however disadvantages to this employee migration also. For example poorer countries may lose large numbers of valuable skilled workers to overseas employers. The influx of workers into rich companies who are willing to work for lower salaries also brings a risk of lowering wages for local workers, as companies would rather employ less costly foreign staff. The continuity of employment rights across the EU at the present time is likely to be of less benefit to the richer countries than the poor countries. When employees move to another member of the common market they also adopt the right to claim social security, pension and family allowances among other benefits. The richer countries in the common market generally have far more comprehensive benefit structures in place than poor countries ("Europe on the Move"). This combined with the better standard of living and higher salary means that they are likely to attract larger numbers of foreign employees than the poorer countries. This will lead to larger government spending on public services and benefits to support the immigrants. The same effects are unlikely in the poorer countries, as they are likely to attract far fewer workers from abroad. It remains unclear at present however which type of country is likely to benefit more, as although the influx of migrants brings increased public spending, the UK has reported that it has also boosted the economy (Smith).

Consumer Goods

The common market has over 460 million consumers. The majority of these, around 300 million, participate in the single European currency, the Euro. The common market allows for the free movement of people, goods, services and money across its internal borders. This has led to an increase in the both goods and services which the population of Europe has access to, and as a result the price of many consumer goods has fallen. This wider access also raises the quality of the goods which are available, as competition is stronger, forcing quality increases to maintain competitive advantage. The common market also ensures a larger degree of protection to consumers than may have been present in countries previously ("Europe on the Move").

The common market also has legislation which governs food standards and food safety ("Europe on the Move"). While many of the richer countries may have already had such bodies, many of the smaller countries did not. Joining the common market therefore introduces regulations to these countries to protect them from hazards which they would previously have been exposed to.

Companies

The benefits which arise from the common market are not solely experienced by consumers, but also by the companies trading within the common market. Having access to the single market allows access to substantially more customers, allowing businesses to sell more and therefore increase profitability. For companies which were initially established in member countries in which overheads are high, there is the opportunity to move operations to a cheaper country and reduce the business costs. This is not only beneficial to the company, but also beneficial to the poorer countries whose lower overhead costs are likely to attract businesses (Kenen). This will increase tax revenue in those countries, and also promote development in the areas which are settled by businesses. This effect is likely to be detrimental to the richer countries, however, as not only are tax revenues lost, but this may also increase benefit payments if large numbers of the population become unemployed through company relocation.

Additional benefits are to be gained for companies which trade between countries which have adopted the Euro. The single currency removes much of the cost and risk which was traditionally associated with trading between countries ("Europe on the Move"). Members of the common market also benefit from legislation which governs the competition elements of free trade. This legislation prevents any business area or service from becoming monopolized, as this would distort trade within the common market ("The Single Market"). This also encourages the efficient allocation of resources and ensures that all market sectors experience continued growth and development (Kenen: 256).

Conclusions

It can be seen that there are likely to be both positive and negative effects in any country which chooses to join the common market. It is the fact that the benefits outweigh… READ MORE

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