MAASTRICHT TREATY



The Maastricht Treaty, which is formally known as the Treaty on European Union, was signed in Maastricht, the Netherlands, on February 7, 1992. It represented a major step by its signatories towards European economic, political, and social—but especially monetary—integration. The treaty was signed by Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom—the 12 member countries of the European Community. The main proviso of the treaty was the immediate creation of the European Union and by the late 1990s the establishment of the Economic and Monetary Union.

The Maastricht Treaty is part of an evolutionary economic process that began in Europe following the devastation of World War II. Under the prodding of Jean Monnet (1888-1979) and Robert Schuman (1886-1963) of France, and Paul-Henri Spaak (1899-1972) of Belgium, many European leaders came to the conclusion that if economic growth and social and political stability were to be realized then there must be a formal plan for political and economic cooperation between the various nations of western Europe. This plan would also serve as a nonmilitary bulwark against the expansionist threats of the Soviet Union and its Eastern European communist allies.

The first step towards inter-nation cooperation was the formation of the European Coal and Steel Community (ECSC). Established by the Treaty of Paris in 1951, the ECSC united Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany into a single common market that did away with trade barriers relating to coal, steel, scrap metal, and iron ore. The ECSC also allowed the free movement of labor between its signers respective to these industries. The success of the ECSC led to the 1957 signing of the Treaty of Rome and the subsequent establishment of the European Atomic Energy Community and the European Economic Community. In 1967 the executive agencies of these three institutions were combined to form the European Community (EC), which was also known as the European Common Market. Shortly thereafter tariffs relating to trade between member nations were eliminated and a common tariff on goods from nonmember nations was instituted. In 1973 Denmark, Ireland, and the United Kingdom became full members of the EC, as did Portugal and Spain in 1986 and a united Germany in 1990.

The European Economic Community began as a common market whose purpose was to eliminate trade barriers between member countries. As the institution matured over the decades, however, it began moving towards not just economic but also social, political, and monetary integration. This evolution is reflected in the name changes from European Economic Community, to European Community, and finally to European Union. In negotiating the Maastricht Treaty, EC members agreed to a number of key provisions. A common currency was to be established by the end of the 1990s, to be overseen by an Economic and Monetary Union (EMU). The EMU would be responsible for instituting the common currency and establishing a central bank which would supervise the EU's monetary policy. An important part of this plan is the exchange rate mechanism (ERM) which supervises and seeks to stabilize currency exchange rates between member countries.

Other provisions of the Maastricht Treaty called for moving towards a common defense and foreign policy as well as a shared social policy. The treaty gives the EU the right to "support and complement" the activities of member countries in areas of worker health, safety, and sexual equality. There was, however, much dissension and subsequent compromise over parts of the treaty. The United Kingdom, for instance, felt these provisions would compromise existing British law. As with the common currency provision, Great Britain retained the option of unilateral decision making in these regards. The Maastricht accord also authorized EU activities to include: environmental and consumer protection; energy conservation; and education, health, and cultural issues.

Under the treaty, greater aid and assistance was granted to Greece, Ireland, Portugal, and Spain, the so-called poorest nations of the EU. The powers of the European Parliament, an advisory agency of the EC, were expanded in the EU to include the establishment of various "watchdog" committees, input in the appointments of European commissioners, and greater control over legislation passed by the Council of Ministers. The treaty also created an advisory Community of the Regions that represents local and regional governing units.

Ratification of the Maastricht Treaty took two years and numerous compromises and national legislative debates before the 12 EC members voted approval amidst an economic downturn in Europe and growing public disenchantment. The United Kingdom was concerned over loss of sovereignty—especially over the issues of common social policies and a single unit of currency. The French National Assembly had to amend the country's constitution because of treaty provisions dealing with transnational voting rights, visa policies, and the common currency. The German parliament also had concerns over the currency issue as well as discomfort with the ambiguous powers of the European Union and the relative powers of the European Parliament. Ireland's referendum became tied to a controversy over abortion strictures and travel rights. In spite of these roadblocks, Germany in October 1993 became the 12th and final EC member to ratify the Maastricht Treaty, which became effective on November I of that year. The Economic and Monetary Union, the most far-reaching provision of the Maastricht accord, will begin formal operations in January 1999.

SEE ALSO : Euro ; European Union

[ Michael Knes ]

FURTHER READING:

"EMU: An Awfully Big Adventure" (special section). Economist, II April 1998.

Facts on File News Service. "Key Event: Maastricht Treaty Sets Closer Union for Europe." New York: Facts on File, 1997.

Panarella, Alfredo. The Maastricht Treaty and the Economic and Monetary Union. Leuven, Belgium: Leuven University Press, 1995.

Peet, John. "Maastricht Follies." Economist, 11 April 1998, 8-10.

Princeton Economic Institute. "Maastricht Treaty." Princeton, NJ: Princeton Economic Institute, 1998.



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