Understanding the legal status of the world's largest business market: the European Union.

"Sovereignty" has been defined as the supreme, absolute, and uncontrollable power by which any independent state is governed [12], and as the supreme power by which any citizen is governed; it is the person or body of persons in the state to whom there is politically no superior [13]. Sovereignty's requirement that a government possess the "supreme" power within a state has some surprising implications for those who believe that this power must be absolute. For example, the states within the United States have certain powers which are reserved only for themselves and which are not possessed by the federal government. Other powers are shared by state governments and the federal government of the United States. Nonetheless, the federal government of the U.S. has sufficient power to qualify as a political union. Canada also qualifies as a political union, although its provinces possess even greater powers.

The unique nature of the European Union makes analysis of its political union particularly difficult. All EU nation-states have been unquestionably sovereign for a number of years, some for centuries, before entering the European Union. It seems clear that these nation-states remain sovereign, although this issue has sparked a great deal of debate in the European Union during the last few years, based on the fear that their nation-states have lost, or are losing, sovereignty to the central government of the EU [14].

In the past, leaders of the European Union avoided controversy and debate over sovereignty issues by emphasizing development related to economic union while avoiding or understating developments related to political union. This ended after the 2004 expansion of the EU to 25 members, and the sovereignty issue became the focus of many EU politicians. This issue exploded in 2005 as attempts were made by European Union leaders to adopt a new constitution for the EU. Since prior constitutional agreements of the EU required the new constitution to be approved by all 25 European Union members, debate raged about the effects of this constitution on the sovereignty of each nation-state [15].

Citizens of new member states began to ask questions about sovereignty that should have been carefully considered before these member-states became part of the EU. Citizens of nation-states that were EU members before the 2004 expansion suddenly realized the potential impact that the ten new members could have on their daily lives, and began to worry whether important government decisions would be made by an increasingly uncontrollable central European Union government.

In retrospect, it is hard to imagine how these issues were ignored for so long. They were often raised by lawyers and other analysts of the European Union, who are largely ignored by the general public. This was welcomed by EU leaders, who preferred to promote the political development of the European Union with as little difficulty as possible.

The preference of EU leaders to avoid debates about sovereignty is understandable. In the past, European leaders who promoted a European political union repeatedly met with failure, while their attempts to promote economic integration were much more welcomed by Europeans.

It may surprise some, but an attempt had been made for European political union a few years after World War II, well before the European Economic Community came into existence in 1958. This initiative proposed the establishment of a European Political Community in France, Germany, Italy, Belgium, Luxembourg, and the Netherlands. After receiving preliminary governmental approvals, it failed in 1952 because French citizens worried that their sovereignty would be lost and that Germany would eventually dominate this political union.

Despite this failure to achieve political union, these same six nations went on to create the European Economic Community in 1958, which later evolved into the European Union. Even during the early stages of the European Economic Community, fears about the loss of sovereignty kept a number of European nation-states from joining. Iceland, Liechtenstein, Norway and Switzerland declined EU membership, and still do so. The United Kingdom, Austria, Denmark, Malta and other current EU members originally refused to join the European Economic Community because of sovereignty concerns. Citizens and politicians of some of these countries continue to be sensitive about sovereignty issues.

Conclusion: Elements of EU Nationhood

Since a political union is created when the union achieves the status of a sovereign nation-state, the development of a political union can be measured by its possession of elements of nationhood.

Following is one of the best descriptions of the European Union's possession of various essential elements of nationhood: "It has an integrated economy and commercial market, a common political system and government, a common legal and regulatory system, and an increasingly common society ...: a union constitution (the latest version being the 2003 Treaty of Nice); superiority of union law over State law; an independent supreme court; political parties operating on a union-wide basis; free movement of goods, services, capital and labor; a common external tariff; union passports and citizenship; equal treatment under each State's laws; political homogeneity; a national flag and anthem; a special national celebration day (May 9); an independent national government; a union parliament, executive and judiciary; union source labels for products; and an absence of internal tariffs. The EU now has a common currency, the Euro, representing thirteen EU nations. Its common foreign policy mechanism already exists despite a clumsy implementation procedure which is scheduled for improvement. An EU army also is being developed, although the European Command of NATO and the Western European Union already operate functionally as an EU army" [16].

Increasingly, world organizations and governments have recognized the developing sovereignty and political development of the European Union. The EU negotiates as one political entity before the World Trade Organization and other world bodies.

The United States Central Intelligence Agency recognized the European Union's national characteristics in 2005 when it began listing the European Union as a separate entity from its members in its "World Factbook." The World Factbook stated that the European Union has "many of the attributes associated with independent nations," and that the European Union "continues to accrue more nation-like characteristics for itself and so a separate listing was deemed appropriate."

References

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2. Manna, J.S., and Wander, L.A. International Business and Law. Brooklyn, N.Y. Midlantic, 2006, page 71.

3. International Business and Law, pages 71-72.

4. "The Euro: Our Currency" ec.europa.eu/economy_finance/euro/glossary/glossary_en.htm, "EU Leaders Support Slovenia's Entry into the Eurozone" www.kpv.gov.si/index.php?id=230&L=1&tx_ttnews[tt_news]=972&tx_ttnews[backPid]=225&cHash=6587911169

5. International Business and Law, page 57.

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8. United States vs. Kusche, 56 F.Supp. 201, 207, 208 (D.C. California). (1944).

9. Ojuland, Kristiina, the Estonian Minister of Foreign Affairs. Address at St. Antony's College, Oxford, February 19, 2004.

10. International Business and Law, page 57.

11. City of Bisbee vs. a Cochise County, 52 Ariz. 1, 78 (1938), page 2d 982, 986.

12. Chisholm vs. Georgia, 2 Dall, 2 U.S. 419, 2 Dall. 419, 1793 WL 685 (U.S.Ga.), 1 L. Ed. 440 (1793).

13. Whitlock, C. "France Rejects European Constitution: Voters Say No by Wide Margin, Defying Leaders and Endangering Unification Plan," Washington Post Foreign Service, 7, Monday, May 30, 2005, page A01.

14. Historical Deceptions: European Union from the World Affairs Brief: Dangers of the New EU and How It Affects Everyone. www.worldaffairsbrief.com/keytopics/EU.shtml

15. Treaty establishing a Constitution for Europe, Wikipedia http://en.wikipedia.org/wiki/European_Constitution

16. International Business and Law, page 63.

L. V. Kurylo (1)

S. J. Maffei (2)

(1) L. V. Kurylo received a law degree from Lvivskyi Natsionalnyi Universytet imeni Ivana Franka in the Ukraine, and now specializes in litigation and banking issues.

(2) S. J. Maffei practices law in New York, specializing in business law and regulation.