The European Union (EU) was originally established as the European Economic Community (EEC) on 25 March, 1957 by the Treaty of Rome agreed to by the governments of Belgium, France, the Federal Republic of Germany, Italy, Luxemburg and the Netherlands. The EEC came into operation on January 1958, and was renamed the EU in November 1993. By 2006, the membership had increased to 25 including the United Kingdom, Denmark, Ireland, Greece, Spain, Portugal, Sweden, Austria and Finland that joined between 1973 and 1995. The economic objectives of the EU include the following:
- To promote free trade between member countries through the removal of tariffs and other non-tariff barriers to free trade.
- To harmonize trade policies of members by ensuring that members impose tariffs on imports from non-member countries at the same rate.
- To guarantee common internal price levels and promote stabilisation of farmers’ incomes by penalising imported food items through Common Agricultural Policies (CAP).
- To encourage free movement of factors of production, especially labour and capital, within the community.
- To harmonise the tax systems of member countries with a view to removing any hidden barriers to trade.
- To integrate the monetary systems of member countries so as to facilitate the expansion of bilateral trade between member countries.
- To promote common regional policy through the establishment of a regional development fund. The EU is to ensure that no member nation is left to suffer economic depression.
- To develop common transport policy.
- To create new world economic order and agreement with developing countries.
A number of institutions, organizations and funds were established as well as common economic policies adopted to promote the realisation of the above objectives.
The major achievements of the EU from the standpoint of the impact of the various actions taken on the economies of the member countries include:
- The EU promotes specialisation among member countries such that each member tends to specialize in their line of comparative cost advantage. This leads to efficient utilization of productive resources, greater output and improved standards of living within the sub-region.
- The EU provides a large market for the products of member countries. This encourages large-scale production with its concomitant economies of scale and increased employment opportunities.
- The removal of quotas and tariffs leads to keener competition in the larger market. This leads to effective resources allocation as a result of which factors of production receive higher incomes.
The EU has been relevant to the development aspirations of countries in West African sub-region under the Yaoundé and Lomé Conventions in the following ways:
- Financing rural-electrification projects.
- Providing grants to improve health facilities.
- Encouraging industrial cooperation through the transfer of technology and funding research programmes to boost industrial activities.
The Lomé Convention is a series of trade and economic co-operations and agreements between the EU and countries from the African, Caribbean and Pacific states (ACP).