The European Union – Economy Overview

• Political Centers: Brussels, Strasbourg, Luxembourg
• Area: 4,324,782 km²
• Population: 497,198,740
• GDP (PPP): US$14.712 trillion
• GDP (Nominal): US$16.830 trillion
• Currency: Euro (EUR)
• Time Zone: GMT to +2

The European Union (EU) is an economic and political entity comprised of twenty-seven European countries. The EU was established in 1993 by the Maastricht Treaty, which basically expanded the existing body of the European Community to include foreign and domestic affairs authority.

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The EU established a single economic market by using a standardized system of laws that applies in all member countries. The purpose of these laws is to guarantee the freedom of movement of people, goods, services and capital. The EU includes supranational bodies, operating independently of the different member states. The European Central Bank is one such body. Fifteen of the EU's members have adopted the euro as their official currency, thus constituting the Eurozone.

Although the U.S still holds the record national GDP, the combined EU generates an estimated 30% share of the world's GDP and is today the largest economy in the world. It is the largest exporter of goods, and the second largest importer. The EU is the biggest trading partner to many countries in the world such as India, and China. According to Fortune Global 500, of the top 500 largest corporations by revenue, 163 are EU based.

Industry

The EU is a postindustrial economy, with the services sector making up 69.4% of the combined GDP. The manufacturing industry remains responsible for 28.4% of GDP, while agriculture makes up only 2.3% of GDP.

Tourism has become a major industry, especially since internal tourism was made more convenient for EU citizens by the Schengen treaty and the Euro. All citizens of the EU can travel through member states without a visa. Considered as separate entities, France is the world's number one tourist destination for international visitors, with Spain, Italy and the United Kingdom coming in at the 2nd, 5th and 6th spots respectively.

Trade

The EU is the largest exporter in the world and the second largest importer. Internally, there are no tariffs and border controls to hinder trade between the member states. In the Eurozone trade is further enhanced by the benefits of a single currency, avoiding the headaches of currency exchange.

Energy

The EU's energy policy is a derivative of the original European Coal and Steel Community. The October 2005 meeting of the European Council saw the approval of a mandatory energy policy, whose first draft was published in January 2007. The energy policy's main agendas are to increase competition in the internal market, encourage interconnections between electricity grids, diversify energy resources, reformulate a framework for energy co-operation with Russia and energy-rich states in Central Asia and North Africa, optimize energy use and fund the development of new energy technologies.

The EU is currently the world's leading importer of oil and gas, a fact that sparks concerns over the EU's fuel dependency on foreign countries, primarily Russia. Further unease followed a series of conflicts between Russia and its neighbors, threatening the supply of gas. The EU is currently directing efforts toward diversifying its energy supplies.

Agriculture

The EU's Common Agricultural Policy (CAP) was one of the main goals of the original European Community. The policy's objectives are to increase agricultural production, to provide assurance of food supplies, to maintain a high quality of life for farmers, to stabilize markets and ensure reasonable consumer prices. Until the 1990s the policy accounted for over 60% of the European Community's annual budget, and even today it still accounts for approximately 35%.

This policy has been criticized as a form of protectionism, with grave accusations pointing at damage to developing countries. Its one time over production was also noted for being detrimental on environmental grounds. One of the CAP's most blunt opponents is the UK, with France being its most vocal proponent.

Agriculture brings in only 2.3% of the EU's GDP.

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