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Regional Economic Integration and Brexit
You are about to read a short case exploring Britain's pending exit from the European Union (EU). The European Union is an example of regional economic integration. Britain has been a member of the trading bloc since 1973 but recently held a vote to determine whether to continue to be a part of the group. You will be asked to answer questions linking your knowledge from the chapter to the situation detailed in the case.
Review the text material on types of organizational structures, and then read the following short case. When you have finished reading the case, answer the questions below.
In 2016, then British Prime Minister David Cameron announced a referendum that would allow British citizens to vote on whether Britain should continue to be part of the European Union or whether it should leave the trading bloc. Brexit, as the possible departure was called, quickly became a talking point throughout Europe and even in other countries such as the United States. Everyone from politicians to union leaders weighed in with their perspective of what Britain should do. Prime Minister Cameron was pushing for his country to remain in the European Union, but fellow Conservative party member Boris Johnson, the popular mayor of London, campaigned for the country to leave. U.S. leaders wanted Britain to remain a part of the European Union for political reasons as much as economic reasons, but some European Union members felt that Britain should leave.
Britain entered the European Union in 1973, joining what was then a relatively small group of countries trying to establish a trading bloc that would, through free trade, be beneficial for all members. Over time, the level of integration among the European Union countries has increased. The Eurozone was created, and there has been distinct movement toward a unified banking system. The EU Charter of Fundamental Rights was signed, as was the Schengen Agreement to eliminate border controls.
Britain has not always embraced European Union policies and demands. The country opted out of the European Monetary System in 1978, and in 1992, it was forced out of the Exchange Rate Mechanism after it put its own interests ahead of those of the bloc. In 2002, Britain once again forged its own path, choosing to keep the pound as its currency, rather than adopt the euro. Similarly, David Cameron chose in 2011 to veto a fiscal compact designed to further integrate Eurozone members.
Some scholars and bureaucrats argue that without a significant overhaul, the European Union is nothing more than a glorified free trade zone. Others, however, argue that the basic premise for the European Union still remains. The Treaty of Maastricht and the Treaty of Lisbon marked movement beyond a purely economic alliance and toward greater political and fiscal union.
What fundamental element of a political union is the European Union missing by Britain's decision to opt out of provisions such as the E.U. Charter of Fundamental Rights, the Schengen Agreement, and the Eurozone?
Multiple Choice
A. The complete integration of trade and currency regulations for member and nonmember nations.
B. The automatic currency adjustment alternative used by the European Union's Central Bank.
C. The identity of the country bloc as a singular decision-making entity.
D. The ability to coordinate PPP across member nations.
E. The willingness of countries to give up sovereignty for the benefit of all.