STRUCTURE

In the EU's unique institutional set-up:

 the EU's broad priorities are set by the European Council, which brings together national and EU-
level leaders
 directly elected MEPs represent European citizens in the European Parliament
 the interests of the EU as a whole are promoted by the European Commission, whose members
are appointed by national governments
 governments defend their own country's national interests in the Council of the European Union.

Setting the agenda

The European Council sets the EU's overall political direction – but has no powers to pass laws. Led by its
President - currently Donald Tusk - and comprising national heads of state or government and the
President of the Commission, it meets for a few days at a time at least twice every 6 months.

Law-making

There are 3 main institutions involved in EU legislation:

 the European Parliament, which represents the EU’s citizens and is directly elected by them;
 the Council of the European Union, which represents the governments of the individual member
countries. The Presidency of the Council is shared by the member states on a rotating basis.
 the European Commission, which represents the interests of the Union as a whole.

Together, these three institutions produce through the "Ordinary Legislative Procedure" (ex "co-
decision") the policies and laws that apply throughout the EU. In principle, the Commission proposes new
laws, and the Parliament and Council adopt them. The Commission and the member countries then
implement them, and the Commission ensures that the laws are properly applied and implemented.

Other EU institutions and bodies

Two other institutions play vital roles:

 the Court of Justice of the EU upholds the rule of European law

 the Court of Auditors checks the financing of the EU's activities.

The powers and responsibilities of all these institutions are laid down in the Treaties, which are the
foundation of everything the EU does. They also lay down the rules and procedures that the EU institutions
must follow. The Treaties are agreed by the presidents and/or prime ministers of all the EU countries and
ratified by their parliaments.

The EU has a number of other institutions and interinstitutional bodies that play specialised roles:

 the European Central Bank is responsible for European monetary policy

  the European External Action Service (EEAS) assists the High Representative of the Union for
Foreign Affairs and Security Policy, currently Federica Mogherini. She chairs the Foreign Affairs
Council and conducts the common foreign and security policy, also ensuring the consistency and
coordination of the EU's external action.
 the European Economic and Social Committee represents civil society, employers and employees
 the European Committee of the Regions represents regional and local authorities
 the European Investment Bank finances EU investment projects and helps small businesses
through the European Investment Fund
 the European Ombudsman investigates complaints about maladministration by EU institutions
and bodies
 the European Data Protection Supervisor safeguards the privacy of people’s personal data
 the Publications Office publishes information about the EU
 the European Personnel Selection Office recruits staff for the EU institutions and other bodies
 the European School of Administration provides training in specific areas for members of EU staff
 a host of specialised agencies and decentralised bodies handle a range of technical, scientific and
management tasks

DECISION-MAKING

The EU’s standard decision-making procedure is known as 'Ordinary Legislative Procedure’ (ex
"codecision"). This means that the directly elected European Parliament has to approve EU legislation
together with the Council (the governments of the 28 EU countries).

Drafting EU law

Before the Commission proposes new initiatives it assesses the potential economic, social and
environmental consequences that they may have. It does this by preparing 'Impact assessments' which
set out the advantages and disadvantages of possible policy options.

The Commission also consults interested parties such as non-governmental organisations, local
authorities and representatives of industry and civil society. Groups of experts give advice on technical
issues. In this way, the Commission ensures that legislative proposals correspond to the needs of those
most concerned and avoids unnecessary red tape.

Citizens, businesses and organisations can participate in the consultation procedure via the website Public
consultations.

National parliaments can formally express their reservations if they feel that it would be better to deal
with an issue at national rather than EU level.
Review and adoption

The European Parliament and the Council review proposals by the Commission and propose amendments.
If the Council and the Parliament cannot agree upon amendments, a second reading takes place.

In the second reading, the Parliament and Council can again propose amendments. Parliament has the
power to block the proposed legislation if it cannot agree with the Council.

If the two institutions agree on amendments, the proposed legislation can be adopted. If they cannot
agree, a conciliation committee tries to find a solution. Both the Council and the Parliament can block the
legislative proposal at this final reading.

How is legislation adopted?

 Ordinary legislative procedure (formerly known as ‘Codecision’) - Step-by-step explanation of the

ordinary legislative procedure – where the European Parliament passes laws jointly with the EU
Council – and list of past laws subject to this method
 Official Rules of Procedure of the European Council - How the European Council operates
 European judicial cooperation in civil cases - Cooperation between national courts in civil cases

DISPUTE SETTLEMENT

There are three types of dispute settlement used in EU trade policy:

 Dispute settlement at the World Trade Organisation

The Understanding on Dispute Settlement at the WTO provides WTO Members with a set legal framework
for resolving disputes that arise in implementing WTO agreements.

Ideally disputes are resolved through negotiations. If this is not possible, WTO Members can request a
Panel to settle the dispute. The Panel’s report can also be appealed before the WTO Appellate Body on
questions of law. If a Member does not comply with the recommendations from dispute settlement, then
trade compensation or sanctions, for example in the form of increases in customs duties, may follow.

Many WTO members, including the EU, make active use of this system so that violations of trade rules are
corrected. However, the EU only initiates a dispute settlement case where other ways of finding a solution
have not been productive.

 Resolving differences between States under international trade agreements

Often known as bilateral dispute settlement, the EU includes a mechanism in all its trade agreements
concluded after 2000 so that the countries concerned can resolve their differences on the basis of this
mechanism. This mechanism allows these countries to use a dispute settlement mechanism specifically
designed to deal with disputes arising under the agreement. The system allows for the rapid settlement
of disputes and is modelled on the WTO dispute settlement system.

 Investment dispute settlement

The Treaty of Lisbon included foreign direct investment as part of the EU common commercial policy. As
a consequence, the European Commission now negotiates on behalf of the EU on both the liberalisation
and protection of investment.

The EU is gradually negotiating investment provisions in certain Free Trade Agreements (FTAs) or in self-
standing investment agreements.

These provisions on investment set up a legally binding level of protection for investment. They are
accompanied by so-called investor-to-state dispute settlement (ISDS) mechanisms, which permit
investors to bring claims alleging that one of the investment protection obligations has been breached.
These provisions create a specific procedure for an investor to bring a case before an international
tribunal.

In order to stay up-to-date with the highest standards of legitimacy, transparency and neutrality, in
November 2015 the EU agreed on a reformed investment dispute settlement approach. In a nutshell, this
new policy envisages the institutionalisation of the dispute settlement mechanism through the creation
of a permanent Investment Court System (ICS) and the introduction of clearer and more precise rules on
investment protection.

The EU has made significant progress in implementing this new policy, now included in the Comprehensive
Economic and Trade Agreement (CETA) with Canada and the EU-Vietnam FTA, and proposed in the
ongoing negotiations with all partners, including the Transatlantic Trade and Investment Partnership
(TTIP) with the United States. The EU is also working toward the possible creation of a multilateral
mechanism for the settlement of investment disputes.

On 23 July 2014 the European Parliament and Council adopted a regulation to establish a legal and
financial framework for investor-to-state dispute settlement. It manages any possible financial
responsibility deriving from investor-to-state dispute settlement by allocating between the EU and the
Member States the financial responsibility on the basis of who adopted the treatment responsible for a
breach of the agreement. It also deals with who would defend a particular case.

FUNDAMENTAL RIGHTS

The Charter of Fundamental Rights of the European Union (the Charter) brings together the fundamental
rights of everyone living in the European Union (EU). It was introduced to bring consistency and clarity to
the rights established at different times and in different ways in individual EU Member States.

 The Charter sets out the full range of civil, political, economic and social rights based on:
  the fundamental rights and freedoms recognised by the European Convention on Human Rights
 the constitutional traditions of the EU Member States, for example, longstanding protections of
rights which exist in the common law and constitutional law of the UK and other EU Member
States
 the Council of Europe's Social Charter
 the Community Charter of Fundamental Social Rights of Workers, and other international
conventions to which the EU or its Member States are parties.

The Charter became legally binding on EU Member States when the Treaty of Lisbon entered into force in
December 2009.

PRIORITIES

The European Union is facing unprecedented challenges ranging from high unemployment, slow
economic growth, economic uncertainties and a huge investment gap to migratory pressure and
environmental and security challenges, as well as instability in its neighbourhood. To meet these
challenges, Jean-Claude Juncker's Commission identified the 10 key priorities that are the main focus for
the EU institutions:

 Jobs, growth and investment - Stimulating investment and creating jobs

 Digital single market - Bringing down barriers to unlock online opportunities
 Energy union and climate - Making energy more secure, affordable and sustainable
 Internal market - A deeper and fairer internal market
 A deeper and fairer economic and monetary union - Combining stability with fairness and
democratic accountability
 A balanced and progressive trade policy to harness globalization - Open trade – without sacrificing
Europe’s standards
 Justice and fundamental rights - Enhancing cooperation between different EU justice systems and
preserving the rule of law
 Migration - Towards a European agenda on migration
 A stronger global actor - Bringing together the tools of Europe’s external action
 Democratic change - Making the EU more democratic

EURO

The euro is the most tangible proof of European integration – the common currency in 19 out of 28 EU
countries and used by some 338.6 million people every day. The benefits of the common currency are
immediately obvious to anyone travelling abroad or shopping online on websites based in another EU
country.
EU monetary cooperation

The Economic and Monetary Union involves the coordination of economic and fiscal policies, a common
monetary policy and the euro as the common currency. The euro was launched on 1 January 1999 as a
virtual currency for cash-less payments and accounting purposes. Banknotes and coins were introduced
on 1 January 2002.

Which countries use the euro?

The euro (€) is the official currency of 19 out of 28 EU member countries. These countries are collectively
known as the Euro area.

Euro area countries:

 Austria  Greece  the Netherlands

 Belgium  Ireland  Portugal
 Cyprus  Italy  Slovakia
 Estonia  Latvia  Slovenia
 Finland  Lithuania  Spain
 France  Luxembourg
 Germany  Malta
Non-euro area countries

 Bulgaria  Hungary  Sweden

 Croatia  Poland
 Czech Republic  Romania
Countries with an opt-out

 Denmark
 United Kingdom

Over 175 million people worldwide use currencies which are pegged to the euro.

Purpose of the euro

A single currency offers many advantages, such as eliminating fluctuating exchange rates and exchange
costs. Because it is easier for companies to conduct cross-border trade and the economy is more stable,
the economy grows and consumers have more choice. A common currency also encourages people to
travel and shop in other countries. At global level, the euro gives the EU more clout, as it is the second
most important international currency after the US dollar.

Managing the euro

The independent European Central Bank is in charge of monetary issues in the EU. Its main goal is to
maintain price stability. The ECB also sets a number of key interest rates for the euro area. Although taxes
are still levied by EU countries and each country decides upon its own budget, national governments have
devised common rules on public finances to be able to coordinate their activities for stability, growth and
employment.