EU Policies (Leaving Cert Business): Revision Notes

Positive effects:

• Free movement of capital - Irish firms can move money between countries easily, and individuals can invest in companies throughout Europe
• Economies of scale - Access to larger markets allows Irish businesses to increase production runs, reducing costs per unit and offering better value to consumers
• Common external tariffs - The EU protects Irish and other EU businesses from non-EU competition through shared trade barriers
• Simplified documentation - The Single Administrative Document (SAD) system, introduced in 1987, has made customs procedures much easier for Irish businesses

Negative effects:

• Increased competition - The free movement of goods and services means Irish businesses face competition from larger EU companies, which may offer cheaper products
• Free movement of people - EU citizens can work anywhere in the member states, creating more competition for jobs and leading to skills shortages in some areas as Irish workers move to other EU locations
• Government tenders - Public agencies must get quotes from approved EU businesses and purchase from the most competitive supplier, which may not be Irish
• Bureaucracy - The EU sometimes has too many regulations and procedures that can slow business operations and create missed opportunities

While all 27 EU member states participate in the economic union, 19 eurozone countries have adopted the euro as their currency. The remaining eight countries (except Denmark) will adopt the euro once they meet specific economic criteria.

Positive effects:

• Reduced transaction costs - The main advantage for Irish businesses is eliminating currency exchange costs when trading within Europe, which particularly benefits countries like Ireland that export significantly to the EU
• Price stability - The European Central Bank focuses on maintaining stable prices through interest rate policies, which helps facilitate business expansion and investment
• Foreign direct investment - Ireland's common currency attracts international investors because trading within the large European market becomes less bureaucratic and relatively cheaper

Negative effects:

• Exports to the UK - When the UK remained outside the EMU, transaction costs continued for Irish businesses trading with their biggest partner, and euro strength against sterling made Irish exports more expensive
• Loss of economic sovereignty - Ireland no longer controls its own currency and monetary policy, relying instead on eurozone fiscal policies for economic management
• Strict criteria - The seven non-eurozone EU states must meet demanding requirements including low budget deficit, debt-to-GDP ratio, low inflation, and interest rates near EU average, which limits the number of countries Irish businesses can trade with using euros

1. Good quality supplies - Competition ensures Irish consumers get the best chance of accessing quality goods and services. When suppliers compete for business, this leads to increased customer satisfaction, loyalty and profits for Irish businesses.

2. No cartels - The policy prevents businesses from forming anti-competitive cartels that keep prices artificially high or prevent newcomers from entering markets.

3. Fairer bargaining - Large firms cannot use their bargaining power to impose unfair conditions on smaller suppliers or restrict competitors from doing business.

4. Fines - The European Commission can impose financial penalties on companies for unfair practices.

5. Mergers and takeovers - The Commission controls large mergers that would create monopolies, such as when Ryanair attempted to take over Aer Lingus.

6. No unfair state aid - Companies receiving government support gain unfair advantages over competitors. Competition policy generally prohibits state aid unless justified for general economic development reasons. For example, the Commission ordered Apple to pay over €13 billion in unpaid taxes back to Ireland after deeming certain tax arrangements as state aid.

7. Deregulation - The EU has followed a policy of liberalisation, removing state involvement to open markets to competition. This particularly affected transport, energy, postal services and telecommunications sectors. Ireland deregulated its energy and telecommunications markets, ending state-owned monopolies and allowing competitors like Energia and Electric Ireland to enter the market.

The Charter affects Irish businesses in several important ways:

1. Free movement of labour - Workers can migrate freely between EU countries, which benefits employers through improved recruitment and selection opportunities.

2. Fair wages - Employees have rights to fair wages, and establishing minimum wage levels has increased costs for some businesses.

3. Skilled labour force - The commitment to vocational training through grant aid directly to trainees has significantly contributed to creating a skilled workforce, benefiting Irish businesses.

4. Health and safety - Charter elements concerning health protection and workplace safety have forced employers to improve health and safety conditions in their workplaces.

The European Commission has proposed changes to create a simpler, more flexible €6.14 billion fund for European fisheries and maritime economy covering 2021-2027. This fund supports more sustainable fishing practices and helps unleash growth potential for coastal communities. The new European Maritime and Fisheries Fund (EMFF) provides improved preferential treatment for small-scale coastal fishing compared to the 2014-2020 period.

The CFP affects Irish fishing businesses through:

1. Access to fishing grounds - Irish coastal waters are reserved for fishermen from local ports up to 12 miles offshore, preventing foreign boats from overfishing these areas. The EU defines where fishing is banned or restricted, and all EU boats must have licences to fish.

2. Higher Irish catches - Before EU membership, Irish catches were low because Ireland couldn't patrol its own waters effectively. The Irish marine Exclusive Economic Zone (EEZ) was extended from 12 to 200 miles, and the EU funded four new fisheries protection vessels so Ireland could patrol its own waters.

3. Conservation of Irish fish stocks - The policy protects fish stocks from overfishing. Total allowable catches (TACs) are divided into national quotas that determine the amount of specific fish species that can be caught, including cod, haddock, prawns and mackerel.

4. Young fish catches are reduced - Net mesh sizes are regulated so fewer young fish are caught, and limits apply to different fishing seasons.

5. Monitoring fishing activity - Each member state has responsibility for ensuring all rules are followed. The EU provides aid to Ireland for purchasing fishery protection vessels and aircraft for monitoring authorities.

6. Irish fisheries market - The CFP aims to stabilise the Irish fisheries market, guarantee steady product supply, provide reasonable prices for Irish consumers and support Irish fishing communities.

The CAP keeps rural economies alive by promoting jobs in farming, agri-food industries and associated sectors. Recent proposals aim to make the CAP more responsive to current and future challenges like climate change and generational renewal in farming. Funding comes through the European Agricultural Fund for Rural Development (EAFRD).

1. Supplements to farm incomes - The CAP promotes fair living standards for farmers, whose average incomes have traditionally been lower than average industrial earnings.

2. Stable prices - The policy stabilises agricultural markets and regulates prices to prevent huge fluctuations in what farmers receive for their annual output.

3. Environment - Society benefits through better environmental protection as farmers adopt sustainable practices.

4. Food traceability - The CAP helps provide safe, traceable food and ensures farmers continually improve their production standards.

5. Infrastructure - The policy preserves and restores rural infrastructure and villages, supporting Ireland's tourism industry.

6. Funding - Since joining the EU, Ireland has received major funding benefits, including more than €41 billion from the CAP alone.

The policy operates through five main funding mechanisms:

1. European Regional Development Fund (ERDF) and Cohesion Fund (CF)
2. European Social Fund (ESF)
3. European Agricultural Fund for Rural Development (EAFRD)
4. European Maritime and Fisheries Fund (EMFF)

These funds work together to support comprehensive development across different sectors of the European economy.