GXS Insights

Select an Insights Edition

• Insights Index
• 1st Edition: Inside SaaS 2.0
• 2nd Edition: Navigating Cross Border Business Boundaries
• 3rd Edition: How to Increase ERP Success with B2B Integration
• 4th Edition: Enhancing Customer-Centric Supply Chains

2. Europe and EU

The European Community (EC) was first established in 1967 by the bringing together of three disparate economic and trade bodies – the European Coal and Steel Community (ECSC, created in 1951 through the Treaty of Paris), the European Economic Community (EEC, created in 1957 through the Treaty of Rome), and the European Atomic Energy Community (EAEC, or EURATOM). This initial Community consisted of West Germany, Italy, France, Belgium, the Netherlands and Luxembourg. Denmark, Ireland and the UK joined in 1973. Greece joined in 1981, with Spain and Portugal joining in 1986.

The 1993 Maastricht Treaty formally created the European Union (EU), and Austria, Finland and Sweden joined the new Community in 1995. Cyprus, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia and Slovenia joined in 2004. Romania, Bulgaria and Turkey are hoping to become members in the near future.

As it stands, the existing 27 countries of the EU create an economic community that provides an overall capability close to $17t/€12t – the largest single financial trading community in the world, exceeding that of China, India and the US.

The total population is around 500million – a little under a tenth of the total world population, giving the third largest single population market behind China and India.

The EU also has trade agreements in place with non-EU countries. These are covered by European Union Association Agreements (EUAAs, or just AAs). There are just over 20 such agreements in place covering Free Trade Agreements with individual countries, with many more in progress.

The EU also has European Neighbourhood Policies (ENPs) that cover trade agreements with many countries, including Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Lebanon, Syria, Israel, The Palestinian Authority, Moldova, Ukraine, Georgia, Armenia, Azerbaijan and Belarus, as well as special agreements with Russia through the creation of EU-Russia Common Spaces.

Outside of the EU, other trade agreements are in place. For example, the European Free Trade Association (EFTA) covers trade amongst those countries that have effectively chosen not to be part of the EU, these being Iceland, Lichtenstein, Switzerland and Norway.  EFTA was a larger grouping of countries, including the UK, Portugal, Denmark, Austria and Portugal. As these countries joined the EU, their membership of EFTA lapsed. The European Economic Area (EEA) then pulls together the EU and the EFTA countries to provide relatively free trade movements between the countries involved.

Similarly, CEFTA (Central European Free Trade Association) covers trade between Croatia, Macedonia, Moldova, Montenegro, Serbia and UNMIK (on behalf of Kosovo). CEFTA also covered Poland, Bulgaria, Slovakia, Romania, Hungary and the Czech Republic, but these countries’ accession to the EU superseded their CEFTA membership. However, there remain trading links between these countries and the remaining CEFTA members. The EU has a Stability and Association process (Sap) in place with CEFTA.

As time goes forward, it is likely that further consolidation between the main economic blocs in Europe will continue. For countries that remain at the edge, such as Turkey, the drive is towards EU membership, and bi-lateral free trade agreements are being put in place with EU members and other countries in an attempt to reinforce credentials as a stable and real force in European trade, as well as a gateway country between Europe and Asia.

This all points to Europe remaining a highly dynamic environment – in both positive and negative ways. On the positive side, Quocirca believes that further consolidation will lead to greater harmonisation and that the barriers to cross-border trade will be lowered. However, alongside this will have to be laid the fact of organisations having to deal with continually changing legal frameworks and laws enacted to deal with point solutions, both in the attempts to drive this harmonisation, and in dealing with the issues that continued expansion of the EU and the move to European/Asian, European/African, European/Middle Eastern and other trade agreements expose.

However, the growing economies of China and India have greater advantages for internal B2B transactions – they are dealing with essentially single linguistic and legal frameworks and, unless European organisations can get to grips with Pan-European issues, the promise of such a large economic trading bloc may be lost, and the emerging markets will take the opportunities and accelerate past Europe.