America and the Euro
America’s relationship with Europe has long been the cornerstone of our economic and foreign policy. Today, America’s fortunes remain fundamentally linked with Europe’s. Needless to say, we have a security interest in what happens in Europe, but we also have a vital economic stake. Together, the United States and the EU produce close to half of all goods and services in the world and account for over half of all world trade. While we put great attention on emerging markets throughout the world, one cannot overstate the importance of our commercial relationship. The EU is by far our largest commercial partner. The annual value of U.S. and EU trade exceeds $250 billion. Europe is twice as large a market for American companies as Canada and Japan combined. The U.S. and the EU are also the largest investors in each other’s markets. Europe is also the United States most important partner in supporting the global trading system.
The launch of the Economic and Monetary Union (EMU) is part of a broader process of enlarging and deepening the European union. EU leaders view the EMU as the next historic step in a long process of European integration and essential to ensuring a global role for Europe in the future. This drive toward a unified European currency has long been on the minds of Europeans, ever since a European commission conceived it in 1957.
Economic strength, stability, and vitality in Europe is in the United States national interests. A strong European economy will benefit U.S. exports and American economic interests in general. Though business will have to deal with certain transitions and changes attendant to the adoption of a single currency. The U.S. has a strong interest in Europe’s future growth and prosperity. Our interest lies in seeing the development of a robust and healthy European economy that is open to world markets. President of the European Commission Romano Prodi strengthens the value of the U.S.-EU relationship by stating, “The political and economic ties between Europe and the United States have been strengthened by over 40 years of close cooperation toward common goals.” For a visual understanding on the United States and the European Unions relationship refer to appendix A, US-EU trade in goods, appendix B, US-EU trade in services, and appendix C, US-EU investment.
Our analysis will include the history leading to the emergence of the European Economic Community and the European Union. Given the foundational background, we can then move into the topic at hand, the euro. Analysis on the euro will include the changeover stages, leading into the heart of the research, the advantages and disadvantages for both U.S. business and European businesses dealing with the single currency. Lastly a comparison between the euro and the dollar will wrap-up the research.
THE ROAD TO A SINGLE CURRENCY
EUROPEAN ECONOMIC COMMUNITY
To first understand the Euro, you must understand the...