European Monetary Union

1.1 Economic Integration

Already while the Second World War 44 nations signed the contract of Bratton Woods, which should guarantee a stable currency system with fixed exchange rate. Later the "Werner Group", which was a group of experts and led by the Luxembour-gian Prime Minister Pierre Werner, had the idea of a European currency. However the idea was too early. First the contract of Bratton Woods had to get in trouble in order to make something going on.

Since the collapse of Bratton Woods in 1971, the gap between normal states and economic powers grew always faster and faster. Soon the first countries crystallized from the rest, which would be the economic superpowers. Since none of the Euro-pean countries was big enough to keep up with economic powers like the United States in a long term view, unity between the different states of Europe became more and more important. If Europe wanted to show that it could be an independent global player, it had to bundle up its forces.

In order not to get addicted of any other economic power, it primarily was important that the different states started to strengthen themselves by increasing their interstate trade, within the region of Europe. As a consequence Europe was able to appear as a strong and independent player on the world market. Moreover there was the idea to support the economic growth based on the element of division of labour. In the fore-ground there is the theory of comparative cost advantages of David Ricardo. Each country produces the products where it has the lowest costs and exchanges it with other products of other countries (Hammerschmidt, Kort,1999).

If the different states are economically well integrated, customs between member states can be removed, and firms are able to enter new markets with competitive prices. So firms are in permanent competition, well prepared for the global market and not protected by the state. Moreover it makes it easier to join any cooperation, merger or acquisition. Parts for products can be produced by that member state that can produce it by the lowest cost, and there is no risk of customs by the import.

1.2 Economic Integration on Monetary Union

The most effective step in direction of a strong Europe was the introduction of the Euro. With this unitary currency, which completely replaced the old ones, a lot of money could be saved and used for new businesses. In former days, there were re-peating national currency crisis, which resulted from different monetary policies. With the introduction of the Euro, these problems disappeared with one hit - a circum-stance that enormously increased monetary mobility. It became easy to spend money all over Europe.

Furthermore there has been a significant reduction in transaction costs and price transparency. On the one hand, a fact that makes it cheaper to buy products abroad, on the other hand, a circumstance that makes prices more comparable for everyone. Another advantage of economic integration is the removal of exchange rates. Firms which have export or import businesses do not have to speculate anymore. Business partners use the same currency and there is no need for foreign exchange anymore.

1.3 Economic Integration at the Labour Market

Another important aspect is the labour market. With the EU it became very easy for everybody to move inside the European Union and take up an employment some-where in Europe. However that did not really work out up to now, because of lan-guage barriers. It will still take some time to get over that barrier and reach a certain flexibility on the labour market, but flexibility like in the United States will never be reached. For this the cultures and mentalities are too different.

2 How has the Single Europe Act worked? Is there much left to do?

The Single European Act was the first modification of the foundational treaties of the European Communities, the Treaty of Paris in 1951 and the Treaty of Rome in 1957. Therefore, it represents the first profound and wide-ranging constitutional reform of the European Union since the 1950s. The act was signed at Luxembourg on Febru-ary 17, 1986, and at The Hague on February 28, 1986. It came into force on July 1, 1987, under the Delors Commission (Closa, 2003).

Jacques Delors, president of the European Commission, summarised the main ob-jectives of the Single European Act in the following way: "The Single Act means, in a few words, the commitment of implementing simultaneously the great market without frontiers, more economic and social cohesion, an European research and technology policy, the strengthening of the European Monetary System, the beginning of an European social area and significant actions in environment" (Ocaña, 2003).

The Single Europe Act improved key parts of the original Treaty of Rome and in-tended to remove three types of obstacles, namely Physical barriers, technical barri-ers and fiscal barriers.

2.1 Physical Barriers

Physical barriers include border stoppages between member countries of the European community, customs controls as well as associated paperwork.

The elimination of border controls was a key component of the 1992 agenda. These controls included tax collection, agricultural checks, veterinary checks and transpor-tation controls. Without such measures, delays could be reduced and it would be possible to cut costs considerably.

As far as the physical barriers are concerned, it can be stated that they are removed and that the implementation was successful.

2.2 Technical Barriers

Technical barriers involve divergent national product standards, technical regulations, conflicting business laws and the opening of national protected public procurement markets.

As far as standardization is concerned, there were more than 100,000 different regu-lations and standards in the European Community in the 1980s. These regulations and standards included health, safety, environmental and technical measures. Since every member country of the European Community has set its own national stan-dards for a wide range of industries, firms were required to vary products for each different market as well as test them once again. This process made marketing more difficult and increased costs considerably. The attempt of the