Those who
import and export goods have developed relationships with customers and vendors
for millennia. In recent centuries they
had to contend with Tariffs being imposed by their governments. They pressured their governments to agree to recognize
trade associations where corporations could control the tariffs. This occurred
in Europe after World War II.
EU History article - In 1951, the concept of
a European trade area was first established. The European Coal and Steel
Community had six founding members: Belgium, France, Germany, Italy,
Luxembourg, and the Netherlands.
In 1957, the Treaty of Rome established a common market.
It eliminated customs duties in 1968. It put in place standard
policies, particularly in trade and agriculture. In 1973, the ECSC
added Denmark, Ireland, and the United Kingdom. It created its first
Parliament in 1979. Greece joined in 1981, followed by Spain and Portugal in
1986.
In
1993, the Treaty of Maastricht established the European Union common market.
Two years later, the EU added Austria, Sweden, and Finland. In 2004,
twelve more countries joined: Bulgaria, Cyprus, Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, and
Slovenia.
In
2009, the Treaty of Lisbon increased the powers of the
European Parliament. It gave the EU the legal authority to negotiate and sign
international treaties. It increased EU powers, border control, immigration,
judicial cooperation in civil and criminal matters, and police cooperation. It
abandoned the idea of a European Constitution. European law is still
established by international treaties.
Brexit. On
June 23, 2016, the United Kingdom voted to leave the European Union.
It could take two years to negotiate the terms of the exit. Some EU members
asked for an earlier withdrawal. The uncertainty dampened business growth for
companies that operate in Europe.
U.S. companies are the
largest investors in
Great Britain. They invested $588 billion and employed more than a million
people. These companies use it as the gateway to free trade with the
EU. Britain's investment in the United States is at the same level. That
could impact up to two million U.S. / U.K. jobs. It's unknown exactly how many
are held by U.S. citizens.
The
day after the vote, the Dow fell 600 points. The euro fell 2 percent to $1.11. In the face of so much volatility, gold prices rose 6 percent from $1,255 to
$1,330.
What caused Brexit? Many in the United Kingdom, as in
other EU nations, worried about the free movement of immigrants and refugees.
They don't like the budgetary constraints and regulations imposed by the EU.
They want to enjoy the benefits of free movement of capital and trade but not
the costs.
Immigration. In
2015, 1.2 million refugees from Africa and the Middle
East poured through its borders. On New Year's Eve 2016, a gang of
young refugees robbed and sexually assaulted more than 600 women. As a
result, many EU countries sealed off their borders. That stranded 8,000 immigrants in Greece. The EU signed an
agreement with Turkey to take back refugees who had reached Greece. In return,
the EU would pay Turkey 6 billion euros. In the September
2017 election, opposition to the refugees cost Merkel's party its
majority in the
government. Immigration is the main reason the U.K. majority voted for
Brexit.
Greek Debt Crisis. In
2011, the Greece debt crisis threatened the concept of the
Eurozone. It almost triggered sovereign debt crises in Portugal, Italy,
Ireland, and Spain. EU leaders assured investors that it would stand
behind its members' debts. At the same time, they imposed austerity measures to
restrain the countries' spending. They wanted all members to
honor the debt limits imposed by the Maastricht Treaty
requirements.
2008 Financial Crisis. In July 2008, the ECB increased rates to 4.25
percent to combat 4 percent inflation caused by high oil prices. The euro strengthened, weakening EU
exports. Factory orders
plummeted 4.4 percent,
the biggest decrease since 2003.
The
ECB switched to recession-fighting in October, when Lehman
Brothers went bankrupt. By May 2009, it had lowered the rate to 1
percent. But it began raising rates again too soon. By July 2011, the rate
was 1.5 percent, creating a credit crunch and recession. In December 2011, it
lowered the rate back down to 1 percent. In March 2015, the ECB began purchasing 60 billion in euro-denominated
bonds per month. Its launch of quantitative easing pushed the euro's value down to
$1.06 from $1.20 in January. Since then, the euro to dollar conversion has strengthened to $1.23 in April
2018.
In
2007, the EU became the world's largest economy. Its gross domestic product was $14.4 trillion, beating the U.S. GDP of $13.86 trillion. The
EU held onto its premier position through the 2008 financial crisis and the eurozone
debt crisis. In 2013, the United States briefly regained
its leading position. China took over the top
spot in
2014.
The
value of the euro continued to rise until the credit crisis in 2007. At that time, there was a flight to
safety to the dollar. This strengthened the dollar. The euro's weakness didn't boost
exports due to lower worldwide demand.
In 2015 the EU imposed
the UN refugee plan on EU member countries. Poland refused and UK voted to quit
the EU.
Now in 2018, UK is
leaving the EU and Austria, Hungary and Italy have joined Poland in refusing to
take refugees and other EU member countries are trying to get rid of the
refugees they already have. Politicians are in trouble in most EU member
countries because of the refugee problem.
The EU overstepped its
bounds when it imposed laws on the voters of member countries and stripped
their governments of sovereignty. The EU committed suicide when it imposed the
UN refugee program on the citizens of these member countries. Prior to that,
these citizens paid $trillions to convert to wind and solar based on the global
warming hoax. The citizens of these member countries should be furious with the
UN, their elected officials and the EU parliament.
Norb Leahy, Dunwoody
GA Tea Party Leader
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