According to Welch and Welch (2010, p. 511), The EU (European Union) is defined as a single unified market formed by the majority of Western European nations, with a major trading power. At the same time, Griffin and Pustay (2010) also pointed out that as one of the most significant regional trading blocs in the world, EU is made up of 27 member countries with a combination population nearly 490 million and the richest markets in the world, whose total GDP reached about $14.4 trillion contributing to 30% of the world economy.
In terms of the formation of EU, we can primarily resort to its initial purpose to establish this union. The same as the IMF, GATT or the World Bank, setting up of the EU was to promote peace and prosperity by the collaboration in the economic and political aspect in the euro region. And in the 1957, in order to further this target, six European countries including France, Belgium, the Netherlands, Luxembourg, Germany and Italy signed the Treaty of Rome, which built up the Economic Community ( EEC) and facilitated the development of a relatively common market among the mentioned six member nations. And till 2007, there was about 27 European nations joined the EU. (Griffin & Pustay 2010)
Second, as a unique institution, we can characterize the EU both as an intergovernmental and supranational government which is under the charge of four organizations to perform its functions such as executive function, administrative function, legislative function and judicial function by the Council of the EU, the European Commission, the European Parliament and the European Court of Justice. First, the Council of the EU is made up of 27 representatives, which is the most powerful decision making body of EU. Second, the European Commission is also made up of 27 people representing the 27 nations respectively, which acts not only as the guardian of the treaties of EU but also an administrative branch as well as manages the annual budget of EU. Thirdly, the most telling example of the significance of the European Parliament was its growing power to play the consultative role in EU’s policy making, budgetary power and other additional power under the Maastricht, Amsterdam and Nice Treaties. Fourthly, the European Court of justice owns the function to interpret EU laws and makes sure that all of EU member has followed the EU policies and regulations. (Garcia 2011; Griffin & Pustay 2010)
Third, when referring to the rationales for EU to perform its functions, the first newsworthy example is its struggle to create a common market in the early years. For example, the Treaty of Rome’s goal of creating a common market in EU is to build up a common market so as to permit the free floe of goods, services, labor, capital and technology by establish a harmonious environment inside the EU nations to eliminate some conflicts, which was promoted by the White Paper on Completing the Internal Market since 1985. With the sufficient progress in creating the common market inside European, it enables firms to obtain the opportunities to sell their products in a large, rich market free from the barriers to trade. In another word, with the establishment of the common market, the function of the EU to facilitate the prosperity in the European region is largely accomplished. (Egan et al. 2011; Griffin & Pustay 2010)
In addition, to further maximize its function in motivate the regional economy, some new treaties such as the treaty on European Union namely the Maastricht Treaty came into force in 1993, which came up with three pillars to further enhance the economic and political integration in the European region including the new agreement among member nations to establish common foreign and defense policies, the new agreement among members to develop collaborations on police, judicial as well as public safety issues and some new provision added into the old familiar European Community in order to set up the economic and monetary union among the member nations. (Craig & Burca 2008; Griffin & Pustay 2010)
And moreover, with reference to the Maastricht Treaty, the monetary union namely the single currency called euro is set up by the EU in 2009. And with the assistance of the euro, it is helpful to reduce the exchange rate risks and currency conversion costs of firms to manage the business in this region. (Craig & Burca 2008; Griffin & Pustay 2010)
By and large, these rationales for EU to form as a union in European region to promote the prosperity of nations are established on these treaties and the four organizations mentioned above.