The European Union is one of the world’s biggest economies and most powerful rule-makers. Here’s how its 27 countries make decisions, what the single market is, and why its laws reach as far as Australia.
The European Union is a partnership of 27 European countries that have agreed to share many of their laws, a single market and, for 21 of them, a currency, the euro.
It grew out of efforts after the Second World War to bind European countries together economically so they would never go to war with each other again. Six countries formed the European Coal and Steel Community in 1951, and over the decades the group expanded and took on more responsibilities.
The United Kingdom left the EU in 2020, after voting to do so in the 2016 Brexit referendum.
The single market
The EU’s central achievement is the single market. Goods, services, money and people can move freely between member countries, mostly without tariffs, customs checks or work permits.
To make that work, members share common rules on everything from product safety to food standards. The EU also negotiates trade deals as a single bloc, which gives it significant bargaining power.
Most EU countries are also part of the Schengen Area, where people can travel between countries without passport checks.
Who runs it
The EU has several main institutions.
The European Commission, based in Brussels, proposes new laws, enforces EU rules and negotiates trade deals. It’s led by a president, currently Ursula von der Leyen of Germany.
The European Parliament is directly elected by EU citizens every five years and votes on laws and the budget.
The Council of the EU brings together ministers from each member government, while the European Council brings together national leaders to set overall direction.
The Court of Justice of the EU makes sure EU law is applied consistently.
Why it matters globally
Because the EU is such a large market, companies around the world often adopt its rules everywhere to keep selling there. This is sometimes called the “Brussels effect”.
Its General Data Protection Regulation, or GDPR, which took effect in 2018, changed how companies worldwide handle personal data. Its rules for big technology companies, its artificial intelligence law and its carbon tax on certain imports also affect businesses beyond Europe.
Australia and the EU
The EU is one of Australia’s largest trading partners and sources of foreign investment. The two have long negotiated a free trade agreement, with talks repeatedly stalling over access for Australian farm products such as beef and sugar, and the EU’s push to protect the names of European products such as feta and prosecco.
