The European Union (EU) is comprised of 25 independent countries that have united under one European institutional structure, while maintaining national sovereignty. The 1957 Treaty of Rome established the European Economic Community (EEC), which consisted of six-member countries. The purpose behind the treaty was to create a free trade zone where the movement of goods, capital, workers and services was unrestricted. Since 1957, the accession of 19 additional countries has increased EU membership to the current total. Candidate countries scheduled to accede to the EU in 2007 include Bulgaria and Romania, while Turkey and Croatia are currently negotiating for membership.

The EU’s original objective was to oversee the economic operations of the member countries’ single internal market. Each member country delegates a degree of sovereignty to the EU’s network of institutions. National governments are represented in the Council of the European Union, and citizens of the member states are elected to the European Parliament. The 1993 Maastricht Treaty created European citizenship, strengthened the power of the European Parliament, and generated plans for the Economic and Monetary Union (EMU). Within the EMU, 12 EU member states adopted a common currency, the euro. EMU monetary policy of the euro area is administered by the European Central Bank in Frankfurt, Germany. With some exceptions, goods, capital, and labor can move freely between member states. In addition to internal economic dealings, the EU’s large, unified market has led to greater economic leverage internationally.

The EU has seen a decline in real gross domestic product (GDP) growth rates over the past decade. The 2001 – 2005 average GDP growth rate was 1.6 percent per year. By comparison, the 1996 – 2000 period registered an average yearly GDP growth rate of 2.9 percent. The decline exhibited in GDP growth rates over the last five years has been attributed to member countries’ national governments failing to complete reforms set forth in the Lisbon Agenda. The Lisbon Agenda was created in 2000 to stimulate economic growth by encouraging flexibility, innovation, entrepreneurship and e-commerce within the EU. In March 2005, the European Commission re-launched the Lisbon Agenda, seeking to increase the EU’s GDP growth rate to 3.0 percent and to create six million new jobs by 2010.