IV. POLITICAL ENVIRONMENT Nature of Bilateral Relationship with the United States The United States and the European Union enjoy full diplomatic relations distinct from those between the U.S. and the EU member states. A U.S. Mission to the European Union in Brussels is accredited to both the European Commission and to the EU Council of Ministers. The representative of the European Commission in Washington is the only representative from an organization (as opposed to from a nation state) who is accorded full ambassadorial rank by the U.S. -- reflecting the European Union's unique status as a supranational entity. Relations between the United States and European Union are described in a "Declaration on U.S.-EC Relations" which was agreed by the two sides in November 1990. The Declaration calls for biannual meetings between the President of the United States and the President of the European Council (which rotates at six-month intervals among the member states), together with the President of the European Commission. It also calls for biannual consultations between the EU foreign ministers with the Commission, and the U.S. Secretary of State. A series of lower-level meetings are also described in the Declaration. In terms of practical cooperation, the Declaration lists as common goals: support for democracy and human rights world-wide; safeguarding peace and promoting international security; pursuing policies aimed at achieving a sound world economy; promoting market principles and further opening the multilateral trading system; assisting developing countries; and providing economic and political support to the countries of Central and Eastern Europe. The Declaration also calls for specific U.S.-EU cooperation in the fields of: education, science, and culture; combating terrorism, drug trafficking and international crime; environmental protection; and preventing the proliferation of nuclear armaments, chemical and biological weapons, and missile technology. Major Political Issues Affecting Business Climate The two general political issues which are most affecting the business climate within the European Union are enlargement and institutional reform. The European Union has completed an accession treaty with Austria, Sweden, Finland and Norway. An overwhelming "yes" vote (over 65 percent) in an Austrian referendum held on June 12, 1994 ensures that Austria will become a full member of the EU on January 1, 1995. Whether Sweden, Finland, and Norway also join on that date will depend upon referendums to be held in those countries during the autumn of 1994. The addition of new member states will not only change the size of the European Union and the make-up of its institutions, but will influence its policy orientation. Other countries which have either applied to join the EU or have announced their intention to do so include: Turkey, Cyprus, Malta, Hungary, Poland, the Czech Republic, Slovakia, Romania, and Bulgaria. The Treaty on European Union (TEU, the "Maastricht treaty") came into force on November 1, 1993. The EU is working to implement the TEU's many innovations, which include: increased powers for the European Parliament; a European Central Bank and common currency by 1999; a common foreign and security policy; cooperation in justice and home affairs (immigration, drug trafficking, organized crime, terrorism, and others); a new Committee of the Regions (to represent such entities as Flanders, Catalonia, Scotland, the German Laender, and others); and EU citizenship. One of the requirements of the TEU is that another intergovernmental conference be held in 1996 to review the operation of the EU institutions. According to public statements from the member states, the general orientation for the 1996 conference probably will be to streamline existing procedures to make EU decision-making more efficient, to consider whether and how the EU might be made more "democratically accountable", and to structure the institutions in such a way as to allow for further enlargement. Brief Synopsis of Political System, Schedule for Elections, and Orientation of Major Political Parties The main political institutions of the European Union are the Council, the Commission, and the European Parliament. The Council consists of a representative from each EU member state, but actual participation varies according to the subject at hand. For example, foreign ministers sit on the "General Affairs Council," transport minister on the "Transport Council," and finance minister on the "ECOFIN Council." The EU heads of government meet at least every six months as the "European Council." The presidency of the Council rotates among the Member States, and changes every six months. The Member State holding the presidency not only presides at Council meetings, but also has an important role in setting priorities for the entire EU and attempting to moderate differences among the Member States. The Commission is responsible for enforcing EU treaties and policies and negotiating trade issues. It currently consists of 16 Commissioners, plus the Commission President, but the number will increase in January 1995, when new countries join the EU. The Commission President is nominated by the governments of the Member States. Each Member State, according to its size, also nominates either one or two Commissioners. Since the Maastricht Treaty came into force November 1, 1993, the Commission must be approved by the European Parliament, and new commissioners will serve for five years, beginning in January 1995. The term "Commission" is also used for the approximately 15,000 permanent employees who implement EU policies; these officials are divided into 24 directorates general ("DGs"), according to their area of responsibility. The European Parliament (EP) is the only directly-elected EU institution. Union-wide elections are held at five-year intervals, most recently in June 1994. Under Maastricht, the new Commission, which will take office six months after EP elections, must be approved by the EP. The current Parliament has 567 members, but this will increase as new Member States join the EU. EP members belong to national parties, but once in the Parliament, they affiliate with special EP political groups; the Socialist Group and the center-right European People's Party Group are the largest of these. EP committee meetings are held in Brussels, but the main sessions take place in Strasbourg five days per month. EU legislation is initiated by the Commission and approved by the Council. According to the subject matter, the EP may only be consulted on the legislation, or may have varying powers to amend. Under Maastricht, the new "co-decision" procedure enables the EP to meet directly with Council representatives to discuss disputed legislation in certain categories, mostly related to the single market, and to veto such legislation. The total amount of EU budget revenues is determined by the member states, but the EP has significant powers in allocating that half of the budget not concerned with agriculture.