The European Union: Questions and AnswersUpdated January 22, 2021Congressional Research Servicehttps://crsreports.congress.govRS21372

SUMMARYThe European Union: Questions and AnswersThe European Union (EU) is a political and economic partnership that represents a unique formof cooperation among sovereign countries. The EU is the latest stage in a process of integrationbegun after World War II, initially by six Western European countries, to foster interdependenceand make another war in Europe unthinkable. The EU currently consists of 27 member states,including most of the countries of Central and Eastern Europe, and has helped to promote peace,stability, and economic prosperity throughout the European continent.RS21372January 22, 2021Kristin ArchickSpecialist in EuropeanAffairsHow the EU WorksThe EU has been built through a series of binding treaties. Over the years, EU member states have harmonized laws andadopted common policies on an increasing number of economic, social, and political issues. EU members share a customsunion; a single market in which capital, goods, services, and people move freely; a common trade policy; and a commonagricultural policy. Nineteen EU member states use a common currency (the euro), and 22 members participate in theSchengen area of free movement in which internal border controls have been eliminated . In addition, the EU has beendeveloping a Common Foreign and Security Policy (CFSP), which includes a Common Security and Defense Policy (CSDP),and pursuing cooperation in the area of Justice and Home Affairs (JHA) to forge common internal security measures.Member states work together through several EU institutions to set policy and to promote their collective interests.Challenges Facing the EUThe EU is generally considered a cornerstone of European stability and prosperity, but it faces a number of internal andexternal challenges. Managing the Coronavirus Disease 2019 (COVID-19) pandemic and its economic repercussions ispreoccupying EU leaders’ time and attention. Other key issues for the EU include democratic backsliding in some memberstates (including Poland and Hungary), the presence of populist and to some extent anti-EU political parties throughout thebloc, managing relations with the United Kingdom (UK) following its exit from the EU in January 2020 (Brexit), ongoingpolitical and societal pressures related to migration, and a range of challenges posed by both Russia and China. Many of thesechallenges could have implications for the EU’s future shape and character.U.S.-EU RelationsSuccessive U.S. Administrations and many Members of Congress have supported the European integration project since itsinception in the 1950s as a means to prevent another catastrophic conflict on the European continent and to foster democraticallies and strong trading partners. Today, the United States and the EU have a dynamic political partnership and share a hugetrade and investment relationship. U.S. and EU officials traditionally have viewed the partnership as mutually beneficial.During the Trump Administration, U.S.-EU relations came under considerable strain. EU officials were taken aback by whatthey regarded as former President Trump’s unprecedented skepticism of the EU, his vocal support for Brexit, and hiscontention that the EU engages in unfair trade practices that are detrimental to the United States. Many in the EU also wereuneasy with Administration policies on numerous issues, including aspects of relations with Russia and China, Syria, theMiddle East peace process, and the role of multilateral institutions. The EU opposed the Administration’s decisions towithdraw from the 2015 nuclear deal with Iran and the Paris Agreement on combatting climate change. COVID-19-relatedtravel bans; competition for medical equipment, supplies, and the research and development of vaccines and treatments; andU.S. steps to withdraw from the World Health Organization generated additional frictions in U.S.-EU relations.Despite tensions, the Trump Administration sought to cooperate with the EU on some issues. For example, the formerAdministration and the EU attempted to deescalate trade tensions and foster dialogue on certain areas of common interest,including with respect to COVID-19 and China. With the entrance into office of the Biden Administration, the EU hopes torenew and strengthen relations with the United States. At the same time, U.S.-EU differences will likely persist on trade,China, and other concerns. Some in the EU continue to question whether the United States will remain a credibleinternational leader and reliable partner in the long term and argue that the EU must be better prepared to address bothregional and global challenges on its own.This report serves as a primer on the EU. It also discusses U.S.-EU relations that may be of interest to the 117th Congress. Formore information, see CRS Report R44249, The European Union: Ongoing Challenges and Future Prospects, and CRSReport R45745, Transatlantic Relations: U.S. Interests and Key Issues.Congressional Research Service

The European Union: Questions and AnswersContentsWhat Is the European Union?. 1How Does the EU Work? . 1How Is the EU Governed?. 2What Is the Lisbon Treaty?. 3What Are the Euro and the Eurozone? . 4Why and How Is the EU Enlarging?. 6Does the EU Have a Foreign Policy?. 7Does the EU Have a Defense Policy? . 7What Is the Relationship of the EU to NATO? . 8What Is Justice and Home Affairs? . 9What Is the Schengen Area? . 10Does the EU Have a Trade Policy and Process? . 11How Do EU Countries and Citizens View the EU? . 12What Does the UK’s Withdrawal Mean for the EU? . 13Does the United States Have a Formal Relationship with the EU? . 15Who Are U.S. Officials’ Counterparts in the EU? . 15How Are U.S.-EU Relations? . 15FiguresFigure A-1. European Union Member States and Candidates. 18AppendixesAppendix. Map of the European Union and Aspirant Countries . 18ContactsAuthor Information . 18Congressional Research Service

The European Union: Questions and AnswersWhat Is the European Union?The European Union (EU) is a unique political and economic partnership that currently consistsof 27 member states (see the map in the Appendix). 1 Built through a series of binding treaties,the EU is the latest stage in a process of integration begun after World War II to promote peaceand economic recovery in Europe. Its founders hoped that by creating specified areas in whichmember states agreed to share sovereignty—initially in coal and steel production, trade, andnuclear energy—it would promote interdependence and make another war in Europe unthinkable.Since the 1950s, this European integration project has expanded to encompass other economicsectors; a customs union; a single market in which capital, goods, services, and people movefreely (known as the “four freedoms”); a common trade policy; a common agricultural policy;many aspects of social and environmental policy; and a common currency (the euro) that is usedby 19 member states. Since the mid-1990s, EU members have also taken steps toward politicalintegration, with decisions to develop a Common Foreign and Security Policy (CFSP) and effortsto promote cooperation in the area of Justice and Home Affairs (JHA). Twenty-two EU membersparticipate in the Schengen area of free movement, which allows individuals to travel withoutpassport checks among most European countries.The EU is generally considered a cornerstone of European stability and prosperity, but it facesinternal and external challenges. Most notably at present, managing the Coronavirus Disease2019 (COVID-19) pandemic and its economic repercussions has tested the EU. Other key issuesinclude democratic backsliding in some member states (including Poland and Hungary), thepresence of populist and to some extent anti-EU political parties throughout the bloc, managingfuture relations with the United Kingdom (UK) following its exit from the EU in January 2020(Brexit), ongoing political and societal pressures related to migration, and a range of challengesposed by both Russia and China. During the Trump Administration, the EU also grappled withnumerous foreign policy and economic disputes with the United States. Many experts expectU.S.-EU relations will improve with the new Biden Administration, but U.S.-EU tensions onseveral issues likely will remain. This report serves as a primer on the EU and discusses U.S.-EUrelations that may be of interest to the 117 th CongressHow Does the EU Work?EU member states work together through common institutions (see “How Is the EU Governed?”)to set policy and promote their collective interests. Decisionmaking processes and the role of theEU institutions differ depending on the subject under consideration. On a multitude of economic,social, and internal security policies, member states have pooled their sovereignty to varyingdegrees and EU institutions hold decisionmaking authority. EU legislation in such areas often hasa supranational quality, because it is subject to a complex majority voting system among memberstates as well as European Parliament approval and is legally binding on member governments.In certain other areas—especially foreign and security policy—member states have agreed tocooperate but retain full sovereignty. Decisionmaking in such fields is intergovernmental andrequires the unanimous agreement of all EU countries; any one national government can veto adecision. EU institutions generally play a more limited role in the decisionmaking process in suchpolicy areas but may be involved in implementation and oversight.1T he current 27 members of the EU are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark,Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, theNetherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain , and Sweden.Congressional Research Service1

The European Union: Questions and AnswersHow Is the EU Governed?The EU is governed by several institutions. They do not correspond exactly to the traditionalbranches of government or divisions of power in representative democracies. Rather, theyembody the EU’s dual supranational and intergovernmental character: The European Council acts as the strategic guide for EU policy. It is composed ofthe Heads of State or Government of the EU’s member states and the President ofthe European Commission; it meets several times a year in what are often termed“EU summits.” The European Council is headed by a President, who organizesthe Council’s work and facilitates consensus.The European Commission upholds the common interest of the EU as a wholeand serves as the EU’s executive. It implements and manages EU decisions andcommon policies, ensures that the provisions of the EU’s treaties are carried outproperly, and has the sole right of legislative initiative in most policy areas. It iscomposed of 27 Commissioners, one from each EU country. Commissionersserve five-year terms; one Commissioner serves as Commission President, whilethe others hold distinct portfolios (e.g., agriculture, energy, trade). On manyissues, the commission handles negotiations with outside countries.The Council of the European Union (also called the Council of Ministers)represents the national governments. The Council enacts legislation, usuallybased on proposals put forward by the commission, and agreed to (in most cases)by the European Parliament. Different ministers from each country participate inCouncil meetings depending on the subject under consideration (e.g., foreignministers would meet to discuss the Middle East, agriculture ministers to discussfarm subsidies). Most decisions are subject to a complex majority voting system,but some areas—such as foreign and defense policy, taxation, or accepting newmembers—require unanimity. The Presidency of the Council rotates among themember states, changing every six months; the country holding the Presidencyhelps set agenda priorities and organizes most of the work of the Council.The European Parliament represents the citizens of the EU. It currently has 705members who are directly elected for five-year terms (the most recent electionswere in May 2019). Each EU country has a number of seats roughly proportionalto the size of its population. Although the Parliament cannot initiate legislation, itshares legislative power with the Council of Ministers in many policy areas,giving