The European Union: Questions and Answers
October 28, 2021
The European Union (EU) is a political and economic partnership that represents a unique form
of cooperation among sovereign countries. The EU is the latest stage in a process of integration
Kristin Archick
begun after World War II, initially by six Western European countries, to foster interdependence
Specialist in European
and make another war in Europe unthinkable. The EU currently consists of 27 member states,
Affairs
including most of the countries of Central and Eastern Europe, and has helped to promote peace,

stability, and economic prosperity throughout the European continent.

How the EU Works
The EU has been built through a series of binding treaties. Over the years, EU member states have harmonized laws and
adopted common policies on an increasing number of economic, social, and political issues. EU members share a customs
union; a single market in which capital, goods, services, and people move freely; a common trade policy; and a common
agricultural policy. Nineteen EU member states use a common currency (the euro), and 22 members participate in the
Schengen area of free movement in which internal border controls have been eliminated . In addition, the EU has been
developing a Common Foreign and Security Policy (CFSP), which includes a Common Security and Defense Policy (CSDP),
and pursuing cooperation in the area of Justice and Home Affairs (JHA) to forge common internal security measures.
Member states work together through several EU institutions to set policy and to promote their collective interests.
Challenges Facing the EU
The EU is generally considered a cornerstone of European stability and prosperity, but it faces a number of internal and
external challenges. Managing the Coronavirus Disease 2019 (COVID-19) pandemic and its economic repercussions is
preoccupying EU leaders’ time and attention. Other key issues for the EU include democratic backsliding in some member
states (including Poland and Hungary), the presence of populist and to some extent anti-EU political parties throughout the
bloc, managing relations with the United Kingdom (UK) following its exit from the EU in January 2020 (Brexit), ongoing
political and societal pressures related to migration, and a range of challenges posed by both Russia and China. Many of these
challenges could have implications for the EU’s future shape and character.
U.S.-EU Relations
Successive U.S. Administrations and many Members of Congress have supported the European integration project since its
inception in the 1950s as a means to prevent another catastrophic conflict on the European continent and to foster democratic
allies and strong trading partners. Today, the United States and the EU have a dynamic political partnership and share a huge
trade and investment relationship. U.S. and EU officials traditionally have viewed the partnership as mutually beneficial.
During the Trump Administration, U.S.-EU relations came under considerable strain. EU officials were taken aback by what
they regarded as former President Trump’s unprecedented skepticism of the EU, his vocal support for Brexit, and his
contention that the EU engages in unfair trade practices that are detrimental to the United States. Many in the EU also were
uneasy with Administration policies on numerous issues, including aspects of relations with Russia and China, Syria, the
Israeli-Palestinian conflict, and the role of multilateral institutions. The EU opposed the Administration’s decisions to
withdraw from the 2015 nuclear deal with Iran and the Paris Agreement on combatting climate change. COVID-19-related
travel bans; competition for medical equipment, supplies, and the research and development of vaccines and treatments; and
U.S. steps to withdraw from the World Health Organization generated additional frictions in U.S.-EU relations.
With the entrance into office of the Biden Administration, the EU hoped to renew and strengthen relations with the United
States. President Biden has committed to partnering with the EU on a wide range of global challenges. At the same time,
U.S.-EU differences have persisted on a range of issues (including trade and China), and new tensions have emerged,
especially in relation to the U.S. troop withdrawal in Afghanistan and security policy in the Indo-Pacific. Some in the EU
continue to question whether the United States will remain a credible international leader and reliable partner in the long term
and argue that the EU must be better prepared to address both regional and global challenges on its own.
This report serves as a primer on the EU. It also discusses U.S.-EU relations that may be of interest to the 117th Congress. For
additional background, see CRS Report R45745, Transatlantic Relations: U.S. Interests and Key Issues, and CRS Report
R44249, The European Union: Ongoing Challenges and Future Prospects.
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What Is the European Union?
The European Union (EU) is a unique political and economic partnership that currently consists
of 27 member states (see the map in the Appendix).1 Built through a series of binding treaties,
the EU is the latest stage in a process of integration begun after World War II to promote peace
and economic recovery in Europe. Its founders hoped that by creating specified areas in which
member states agreed to share sovereignty—initial y in coal and steel production, trade, and
nuclear energy—it would promote interdependence and make another war in Europe unthinkable.
Since the 1950s, this European integration project has expanded to encompass other economic
sectors; a customs union; a single market in which capital, goods, services, and people move
freely (known as the “four freedoms”); a common trade policy; a common agricultural policy;
many aspects of social and environmental policy; and a common currency (the euro) that is used
by 19 member states. Since the mid-1990s, EU members have also taken steps toward political
integration, with decisions to develop a Common Foreign and Security Policy (CFSP) and efforts
to promote cooperation in the area of Justice and Home Affairs (JHA). Twenty-two EU members
participate in the Schengen area of free movement, which al ows individuals to travel without
passport checks among most European countries.
The EU is general y considered a cornerstone of European stability and prosperity, but it faces
internal and external chal enges. Managing the Coronavirus Disease 2019 (COVID-19) pandemic
and its economic repercussions has tested the EU. Other key issues include democratic
backsliding in some member states (including Poland and Hungary), the presence of populist and
to some extent anti-EU political parties throughout the bloc, managing future relations with the
United Kingdom (UK) following its exit from the EU in January 2020 (Brexit), ongoing political
and societal pressures related to migration, and a range of chal enges posed by both Russia and
China. During the Trump Administration, the EU also grappled with numerous foreign policy and
economic disputes with the United States. The overal tenor of U.S.-EU relations improved with
the start of the Biden Administration, but U.S.-EU tensions on several issues have persisted
(including trade and China), and new rifts have emerged. This report serves as a primer on the EU
and discusses U.S.-EU relations that may be of interest to the 117th Congress.
How Does the EU Work?
EU member states work together through common institutions (see “How Is the EU Governed?”)
to set policy and promote their collective interests. Decisionmaking processes and the role of the
EU institutions differ depending on the subject under consideration. On a multitude of economic,
social, and internal security policies, member states have pooled their sovereignty to varying
degrees and EU institutions hold decisionmaking authority. EU legislation in such areas often has
a supranational quality, because it is subject to a complex majority voting system among member
states as wel as European Parliament approval and is legal y binding on member governments.
In certain other areas—especial y foreign and security policy—member states have agreed to
cooperate but retain full sovereignty. Decisionmaking in such fields is intergovernmental and
requires the unanimous agreement of al EU countries; any one national government can veto a
decision. EU institutions general y play a more limited role in the decisionmaking process in such
policy areas but may be involved in implementation and oversight.

1 T he current 27 members of the EU are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain , and Sweden.
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How Is the EU Governed?
The EU is governed by several institutions. They do not correspond exactly to the traditional
branches of government or divisions of power in representative democracies. Rather, they
embody the EU’s dual supranational and intergovernmental character:
 The European Council acts as the strategic guide for EU policy. It is composed of
the Heads of State or Government of the EU’s member states and the President of
the European Commission; it meets several times a year in what are often termed
“EU summits.” The European Council is headed by a President, who organizes
the Council’s work and facilitates consensus.
 The European Commission upholds the common interest of the EU as a whole
and serves as the EU’s executive. It implements and manages EU decisions and
common policies, ensures that the provisions of the EU’s treaties are carried out
properly, and has the sole right of legislative initiative in most policy areas. It is
composed of 27 Commissioners, one from each EU country. Commissioners
serve five-year terms; one Commissioner serves as Commission President, while
the others hold distinct portfolios (e.g., agriculture, energy, trade). On many
issues, the commission handles negotiations with outside countries.
 The Council of the European Union (also cal ed the Council of Ministers)
represents the national governments. The Council enacts legislation, usual y
based on proposals put forward by the commission, and agreed to (in most cases)
by the European Parliament. Different ministers from each country participate in
Council meetings depending on the subject under consideration (e.g., foreign
ministers would meet to discuss the Middle East, agriculture ministers to discuss
farm subsidies). Most decisions are subject to a complex majority voting system,
but some areas—such as foreign and defense policy, taxation, or accepting new
members—require unanimity. The Presidency of the Council rotates among the
member states, changing every six months; the country holding the Presidency
helps set agenda priorities and organizes most of the work of the Council.
 The European Parliament represents the citizens of the EU. It currently has 705
members who are directly elected for five-year terms (the most recent elections
were in May 2019). Each EU country has a number of seats roughly proportional
to the size of its population. Although the Parliament cannot initiate legislation, it
shares legislative power with the Council of Ministers in many policy areas,
giving it the right to accept, amend, or reject the majority of proposed EU
legislation in a process known as the “ordinary legislative procedure” or “co-
decision.” The Parliament also decides on the al ocation of the EU’s budget
jointly with the Council. Members of the European Parliament (MEPs) caucus
according to political affiliation, rather than nationality; there are seven political
groups and several dozen nonattached MEPs in the Parliament currently.2
 Other institutions also play key roles. The Court of Justice interprets EU laws,
and its rulings are binding; a Court of Auditors monitors financial management;
the European Central Bank manages EU monetary policy and the euro; and
advisory committees represent economic, social, and regional interests.
Also see the text box below on “Key EU Positions and Current Leaders.”

2 Also see CRS In Focus IF11211, The European Parliament and U.S. Interests, by Kristin Archick.
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What Is the Lisbon Treaty?
On December 1, 2009, the EU’s latest institutional reform endeavor—the Lisbon Treaty—came
into force following its ratification by al of the EU’s then-27 member states. It is the final
product of an effort begun in 2002 to reform the EU’s governing institutions and decisionmaking
processes. It amends, rather than replaces, the EU’s two core treaties—the Treaty on European
Union (TEU) and the Treaty on the Functioning of the EU (TFEU). Changes introduced by the
Lisbon Treaty seek to
 enable the EU to function more effectively;
 enhance the EU’s role as a foreign policy actor; and
 increase democracy and transparency within the EU.
To help accomplish these goals, the Lisbon Treaty established two new leadership positions:
 The President of the European Council, a single individual who chairs the
meetings of the EU Heads of State or Government, serves as coordinator and
spokesman for their work, seeks to ensure policy continuity, and strives to forge
consensus among the member states.
 A dual-hatted position of High Representative of the Union for Foreign Affairs
and Security Policy to serve essential y as the EU’s chief diplomat. The High
Representative is both an agent of the Council of Ministers—and thus speaks for
the member states on foreign policy issues—as wel as a Vice President of the
European Commission, responsible for managing most of the commission’s
diplomatic activities and foreign assistance programs.
Other key measures in the Lisbon Treaty included the following:
 Simplifying the EU’s qualified majority voting system and expanding its use to
policy areas previously subject to member state unanimity in the Council of
Ministers. This change was intended in part to speed EU decisionmaking, but
member states stil tend to seek consensus as much as possible.
 Increasing the relative power of the European Parliament by strengthening its
role in the EU’s budgetary process and extending the use of the “co-decision”
procedure to more policy areas, including agriculture and home affairs issues.3 As
such, the treaty gives the European Parliament a say equal to that of the member
states in the Council of Ministers over the vast majority of EU legislation (with
some exceptions, such as most aspects of foreign and defense policy).
For the first time in the EU’s history, the Lisbon Treaty also introduced an “exit clause”—Article
50 of the TEU—which outlines procedures for a member state to leave the EU. A member state
that decides to leave would invoke Article 50 by notifying the European Council of its intentions,
which would trigger a two-year period for withdrawal negotiations to be concluded; the EU may
also decide to extend the time for negotiations.

3 T he Lisbon T reaty technically renames the “co-decision” procedure as the “ordinary legislative procedure.”
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Key EU Positions and Current Leaders
The current President of the European Council is Charles Michel, a former prime minister of Belgium. The
president is appointed by the member states for a 2½-year term (renewable once).
The current President of the European Commission is Ursula von der Leyen of Germany, a former German
defense minister. The commission president is appointed by agreement among the member states, subject to the
approval of the European Parliament. In selecting the commission president, member states must take into
account the results of the most recent European Parliament elections.
Slovenia holds the Presidency of the Council of Ministers (often termed the EU Presidency) from July to
December 2021; France wil hold the presidency from January to July 2022.
Every 2½ years (twice per 5-year parliamentary term), Members of the European Parliament (MEPs) elect the
President of the European Parliament. In July 2019, Italian MEP David Sassoli was elected as president of the
parliament; Sassoli is from the center-left Socialists and Democrats parliamentary group.
The current High Representative of the Union for Foreign Affairs and Security Policy is Josep Borrel of
Spain. The high representative is chosen by agreement among the member states but, like the other members of
the European Commission, must be approved by the European Parliament.
What Are the Euro and the Eurozone?
Nineteen of the EU’s current 27 member states use a common single currency, the euro, and are
often collectively referred to as “the eurozone.”4 The gradual introduction of the euro began in
January 1999 when 11 EU member states became the first to adopt it and banks and many
businesses started using the euro as a unit of account. Euro notes and coins replaced national
currencies in participating states in January 2002. Eurozone participants share a common central
bank—the European Central Bank (ECB)—and a common monetary policy. However, they do
not have a common fiscal policy, and member states retain control over decisions about national
spending and taxation, subject to certain conditions designed to maintain budgetary discipline.
In 2009-2010, a serious crisis in the eurozone developed, beginning in Greece. Over the previous
decade, the Greek government had borrowed heavily from international capital markets to pay for
its budget and trade deficits. As investors became increasingly nervous during 2009 about
Greece’s high sovereign (or public) debt level amid the global financial crisis, markets demanded
higher interest rates for Greek bonds, which drove up Greece’s borrowing costs. By early 2010,
Greece risked defaulting on its public debt. Market concerns quickly spread to several other
eurozone countries with high, potential y unsustainable levels of public debt, including Ireland,
Portugal, Italy, and Spain (the latter two being the eurozone’s third- and fourth-largest economies,
respectively). The debt problems of these countries also posed a risk to the European banking
system, slowed economic growth, and led to rising unemployment in many eurozone countries.
European leaders and EU institutions responded to the crisis and sought to stem its contagion
with a variety of policy mechanisms. To avoid default, Greece, Ireland, Portugal, and Cyprus
received loans from the EU and the International Monetary Fund (IMF) but were required to
impose strict austerity measures. Eurozone leaders also approved a recapitalization plan for
Spanish banks. Other key initiatives included creating a permanent EU financial assistance
facility (the European Stability Mechanism) to provide emergency support to eurozone countries
and a single bank supervisor for the eurozone, as wel as ECB efforts to calm the financial
markets by purchasing large portions of European sovereign debt and providing significant
infusions of credit into the European banking system.

4 T he 19 members of the EU that use the euro are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany,
Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
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The eurozone crisis began to abate in late 2012, as market confidence became more positive and
the situation started to stabilize in most eurozone countries. Ireland exited the EU-IMF financial
assistance program in December 2013; Portugal did so in May 2014, and Cyprus did so in March
2016. EU aid to Spanish banks ceased in January 2014. Nevertheless, many member states
continued to experience weak economic growth and high unemployment. Greece’s economy and
banking system remained in particular distress.
In the first half of 2015, prospects grew that Greece might exit the eurozone (dubbed Grexit) as
the Greek government sought further financial aid from its eurozone creditors but also demanded
debt relief and an easing of austerity. For months, negotiations foundered. While France and Italy
emphasized the political importance of the eurozone, Germany and others (including the
Netherlands, Finland, Slovakia, and Slovenia) opposed debt relief and stressed that al members,
including Greece, must adhere to eurozone fiscal rules. In June 2015, Greece failed to make a
payment to the IMF, and the government closed the banks and imposed capital controls. In July
2015, however, the Greek government acceded to EU demands for more austerity and economic
reforms in exchange for the badly needed financial assistance. Between 2010 and 2018, Greece
received a total of $330 bil ion in loans from the EU, the ECB, and the IMF.5 Greece official y
exited the EU-IMF financial assistance program in August 2018.
From its start, the eurozone crisis generated tensions among member states over the proper
balance between imposing austerity measures and stimulating growth and the need for greater EU
fiscal integration. Traditional y fiscal y conservative member states largely opposed integration
steps that might lead to “bailing out” more indebted countries in the future. Eurozone leaders
have discussed additional measures to improve the eurozone’s economic governance and stability,
but proposals such as establishing a common eurozone budget have long been controversial.6
Analysts suggest the COVID-19-related economic crisis may open the door to further EU
economic integration in the longer term. In July 2020, EU leaders (acting in the European
Council) reached political agreement on a €750 bil ion recovery fund consisting of both grants
and loans for member states, attached to a €1.1 tril ion EU budget for 2021-2027.7 Financing for
the COVID-19 recovery fund is to include the unprecedented issuing of EU bonds backed jointly
by member states. Many EU officials, including ECB President Christine Lagarde, maintain that
the plan to provide grants (as wel as loans) and to issue common EU debt represents a “one-off
response to exceptional circumstances.”8 At the same time, Lagarde asserts that the EU should
consider keeping the recovery fund arrangements in the EU’s “toolbox” for possible use in future
economic crises.9 The EU formal y approved the 2021-2027 budget in December 2020 and
finalized the recovery fund in February 2021.

5 Bart Oosterveld and Alexatrini T siknia, “T his Greek T ragedy Is Not Over Just Yet,” Atlantic Council, August 21,
2018.
6 Pierre Briancon, “T hree Fudges and a Funeral for Eurozone Reform,” Politico Europe, June 21, 2018; Sam Fleming
and Mehreen Khan, “EU Finance Ministers Approve Separate ‘Eurozone Budget’ T ool,” Financial Times, October 10,
2019; and Magnus G. Schoeller, “ Preventing the EU Budget: Issue Replacement and Small State Influence in the
EMU,” Journal of European Public Policy, July 24, 2020.
7 In current prices, the recovery fund (known as NextGenerationEU) is €807 billion (about $940 billio n), and the EU’s
2021-2027 budget (the EU’s Multiannual Financial Framework, or MFF) is €1.2 trillion (roughly $1.4 trillion).
European Commission, The 2021-2027 EU Budget – What’s New?, at https://ec.europa.eu/info/strategy/eu-budget/
long-term-eu-budget/2021-2027/whats-new_en.
8 As quoted in Bjarke Smith-Meyer, “European Central Bank President Dismisses News Reports and Calls the
Pandemic Recovery Fund a One-off,” Politico Europe, September 28, 2020.
9 Bojan Pancevski and Laurence Norman, “How Angela Merkel’s Change of Heart Drove Historic EU Rescue Plan,”
Wall Street Journal, July 21, 2020; Carolynn Look, “ Lagarde Urges EU to Consider Recovery Fund as Permanent
T ool,” Bloomberg.com, October 19, 2020.
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Why and How Is the EU Enlarging?
The EU has long viewed the enlargement process as an extraordinary opportunity to promote
stability and prosperity in Europe. The EU began as the European Coal and Steel Community in
1952 with six members (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands). In
1973, Denmark, Ireland, and the United Kingdom joined what had then become the European
Community. Greece joined in 1981, followed by Spain and Portugal in 1986. In 1995, Austria,
Finland, and Sweden acceded to the present-day European Union. In 2004, the EU welcomed
eight former communist countries—the Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Poland, Slovakia, and Slovenia—plus Cyprus and Malta as members. Bulgaria and Romania
joined in 2007. Croatia became the EU’s newest member on July 1, 2013.
To be eligible for EU membership, countries must first meet a set of established criteria,
including having a functioning democracy and market economy. Once a country becomes an
official candidate, accession negotiations are a long and complex process in which the applicant
must adopt and implement a massive body of EU laws and regulations. Analysts contend that the
carefully managed process of enlargement is one of the EU’s most powerful policy tools and that,
over the years, it has helped to transform many European countries into more democratic and
affluent societies. At the same time, EU enlargement is also a political process. Most significant
steps on the path to accession require the unanimous agreement of the EU’s existing member
states. Thus, a prospective candidate’s relationships or conflicts with individual members may
influence a country’s accession prospects and timeline.
The EU currently recognizes five countries as official candidates for membership. Of these, four
are in the Western Balkans—Albania, Montenegro, North Macedonia, and Serbia. Turkey is also
an official candidate country. Al five candidates are at different stages of the accession process.
Montenegro and Serbia are the farthest along in their accession negotiations. The EU approved
opening accession negotiations with Albania and North Macedonia in March 2020, but these talks
have yet to begin official y. EU accession negotiations with Turkey are stal ed amid heightened
EU concerns about democratic backsliding in Turkey and other tensions in EU-Turkey relations.
The EU regards Bosnia and Herzegovina and Kosovo as potential future candidates for EU
membership (see the Appendix).
The EU maintains that the enlargement door remains open to any European country that fulfil s
the EU’s political and economic criteria for membership. Nevertheless, some European leaders
and publics are cautious about additional expansion, especial y to Turkey (given its large size,
predominantly Muslim culture, and relatively less prosperous economy) or countries farther east,
such as Ukraine or Georgia, in the longer term. Apprehensions about continued EU enlargement
range from fears of unwanted migrant labor to the implications of an ever-expanding EU on the
bloc’s institutions, finances, and overal identity. Experts also point to assessments of weakening
rule of law in several existing EU members—including Poland and Hungary—and questions
about some EU aspirants’ ability to implement EU democratic standards as contributing to
decreased political and public enthusiasm for further enlargement. In early 2020, following
pressure from France and several other member states, the EU revised some aspects of the
enlargement process, partly in response to criticism that the accession process was fal ing short of
its goal of entrenching democratic reforms in candidate countries.10

10 For more information, see CRS Report RS21344, European Union Enlargement, by Kristin Archick and Sarah E.
Garding.
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Does the EU Have a Foreign Policy?
The EU has a Common Foreign and Security Policy (CFSP), in which member states adopt
common policies, undertake joint actions, and pursue coordinated strategies in areas in which
they can reach consensus. CFSP was established in 1993; the eruption of hostilities in the Balkans
in the early 1990s and the EU’s limited tools for responding to the crisis convinced EU leaders
that the Union had to improve its ability to act collectively in the foreign policy realm. Previous
EU attempts to further such political integration had foundered for decades on member state
concerns about protecting national sovereignty and different foreign policy prerogatives.
CFSP decisionmaking is dominated by the member states and requires unanimous agreement of
al national governments. Member states must also ensure that national policies are in line with
agreed EU strategies and positions (e.g., imposing sanctions on a country). However, CFSP does
not preclude individual member states pursuing their own national foreign policies or conducting
their own national diplomacy.
CFSP remains a work in progress. Although many view the EU as having made considerable
strides in forging common policies on a range of international issues, from the Balkans to the
Israeli-Palestinian conflict to Iran, others argue that the credibility of CFSP too often suffers from
an inability to reach consensus. Others note that some differences in viewpoint are inevitable
among a multitude of countries that have different historical relationships and often different
national interests when it comes to foreign policy.
The EU’s Lisbon Treaty sought to bolster CFSP by increasing the EU’s visibility on the world
stage and making the EU a more coherent foreign policy actor. As noted, the treaty established a
High Representative of the Union for Foreign Affairs and Security Policy to serve essential y as
the EU’s chief diplomat. The Lisbon Treaty also created an EU diplomatic corps (the European
External Action Service) to support the High Representative.
In recent years, many European leaders have renewed cal s for the EU to become a more
assertive, independent global actor—often referred to as strategic autonomy. Although this
concept initial y described the need for greater EU action in the security and defense fields, the
EU has recently widened it to include other areas, such as trade, digital technology, and climate
change, among others.11 For some EU officials, ensuring the EU’s position as a robust
international leader reflects concerns about the future trajectory of the U.S.-EU partnership.
Does the EU Have a Defense Policy?
Since 1999, with political impetus initial y from the UK and France, the EU has been working to
develop a Common Security and Defense Policy (CSDP), formerly known as the European
Security and Defense Policy (ESDP). CSDP seeks to improve the EU’s ability to respond to
security crises and to enhance European military capabilities. The EU has created three defense
decisionmaking bodies and has developed a rapid reaction force and multinational “battlegroups.”
Such EU forces are not a standing “EU army” but rather a catalogue of troops and assets at
appropriate readiness levels that may be drawn from existing national forces for EU operations.
CSDP operations focus largely on tasks such as peacekeeping, crisis management, and
humanitarian assistance. Many CSDP missions to date have been civilian, rather than military, in
nature, with objectives such as police and judicial training (“rule of law”) or security sector

11 EU High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission
Josep Borrell, “Why European Strategic Autonomy Matters,” European External Action Service, December 3, 2020.
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reform. The EU is or has been engaged in CSDP missions in regions ranging from the Balkans
and the Caucasus to Africa and the Middle East.
However, improving European military capabilities has been difficult, especial y given many
years of flat or declining European defense budgets. Serious capability gaps exist in strategic air-
and sealift, command and control systems, intel igence, and other force multipliers. Also, a
relatively low percentage of European forces are deployable for expeditionary operations. Some
analysts have suggested pooling assets among several member states and the development of
national niche capabilities as possible ways to help remedy European military shortfal s. In 2004,
the EU established the European Defense Agency to help coordinate defense-industrial and
procurement policy in an effort to stretch European defense funds farther.
Recently, many EU officials and national leaders have supported increased defense spending and
advocated for further EU defense integration. Such cal s have been driven by both the new
security chal enges facing Europe, including a resurgent Russia, and a desire to bolster the EU
project in light of Brexit. Some analysts contend that Brexit could make closer EU defense
cooperation more likely because the UK traditional y opposed certain measures—such as an EU
military headquarters—that it viewed as infringing too much on national sovereignty or the
primacy of NATO as the main guarantor of European security. Commentators also suggest that
European concerns about the former Trump Administration’s commitment to NATO and
transatlantic security provided additional impetus for renewed EU defense efforts.
Since 2016, EU leaders have announced several new initiatives to bolster EU security and
defense cooperation, including a European Defense Fund (EDF) to support joint defense research
and development activities. In 2017, the EU launched a new defense pact (known official y as
Permanent Structured Cooperation, or PESCO) aimed at spending defense funds more efficiently,
jointly developing military capabilities, and increasing military interoperability. EU leaders insist
that efforts such as EDF and PESCO do not represent the first steps toward an EU army and that
member states wil retain full control over national military assets and over defense procurement
and investment decisions.12
Many in the EU argue that concerns raised by the withdrawal of U.S. and European forces from
Afghanistan in August 2021 demonstrate the need for more robust EU defense capabilities. Some
in the EU have renewed cal s for establishing an active EU rapid reaction force, as wel as for
changes to certain EU decisionmaking procedures to al ow such a force to be deployed quickly in
a crisis.13 The EU also has identified strengthening its partnership with NATO as a key pil ar of its
strategy to improve European defense capabilities and EU security cooperation (see next
question). At the same time, implementing EU security and defense initiatives, including PESCO,
and improving European military capabilities remain chal enging.14

12 European Commission Fact Sheet, “European Defense Action Plan —FAQs,” November 30, 2016; Council of the
EU, “Defense Cooperation: Council Establishes Permanent Structured Cooperation (PESCO), with 25 Member States
Participating,” press release, December 11, 2017.
13 EU High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission
Josep Borrell, “Europe, Afghanistan Is Your Wake-up Call,” New York Times, September 1, 2021; Robin Emmott and
Sabine Siebold, “EU Should Enable Military Coalitions to T ackle Crises, Germany Says,” Reuters, September 2, 2021.
14 See, for example, Martin Quencez and Sophia Besch, “T he Challenges Ahead for EU Defense Cooperation,” German
Marshall Fund of the United States, January 22, 2020; Jacopo Barigazzi, “EU Military Projects Face Delays, Leaked
Document Shows,” Politico Europe, July 12, 2021.
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What Is the Relationship of the EU to NATO?
Since its inception, the EU has asserted that CSDP is intended to al ow the EU to make decisions
and conduct military operations “where NATO as a whole is not engaged,” and that CSDP is not
aimed at supplanting NATO’s collective defense role. The United States has supported EU efforts
to develop CSDP, provided that it remains tied to NATO and does not rival or duplicate NATO
structures or resources. Advocates of CSDP argue that more robust EU military capabilities wil
also benefit NATO given that 21 countries currently belong to both organizations.15 The Berlin
Plus arrangement—which was finalized in 2003 and al ows EU-led military missions access to
NATO planning capabilities and common assets—was designed to help ensure close NATO-EU
links and prevent a wasteful duplication of European defense resources. Two Berlin Plus missions
have been conducted in the Balkans, and NATO and the EU have sought to coordinate their
activities on the ground in operations in Afghanistan and various hot spots in Africa.
At the same time, NATO-EU relations have been somewhat strained for years. More extensive
NATO-EU cooperation at the political level on a range of issues—from countering terrorism or
weapons proliferation to improving coordination of crisis management planning and defense
policies—has been stymied largely by EU tensions with Turkey (in NATO but not the EU) and
the ongoing dispute over the divided island of Cyprus (in the EU but not NATO).16 Bureaucratic
rivalry and varying views on both sides of the Atlantic regarding the future roles of NATO and
the EU’s CSDP also have contributed to frictions between the two organizations.
The emergence of new security threats in Europe, however, has prompted some recent progress
toward enhanced NATO-EU cooperation. In 2016, NATO and the EU concluded two new
arrangements—one on countering migrant smuggling in the Aegean Sea and another on cyber
defense—and issued a joint declaration to “give new impetus and new substance” to their
strategic partnership.17 Among other measures outlined, NATO and the EU agreed to boost their
common ability to counter hybrid threats, expand operational cooperation on migration
(especial y in the Mediterranean), and further strengthen coordination on cybersecurity and cyber
defense. In 2018, NATO leaders reaffirmed the importance of the NATO-EU partnership and both
organizations pledged to improve military mobility in Europe.18
Some U.S. experts remain concerned that a minority of EU member states (traditional y led by
France) would like to build an EU defense arm more independent from NATO in the longer term.
French officials, joined by some in the EU, have increased cal s for greater EU strategic
autonomy in the security and defense realm following recent rifts with the Biden Administration
over Afghanistan and the Indo-Pacific. Given previous UK support for ensuring that any EU
defense efforts remained closely tied to NATO, some U.S. analysts worry that Brexit could
embolden the EU to develop a more autonomous EU defense identity.

15 Currently, six countries belong to the EU but not to NAT O (Austria, Cyprus, Finland, Ireland, Malta, and Sweden);
nine other countries belong to NAT O but not the EU (Albania, Canada, Iceland, Montenegro, North Mac edonia,
Norway, T urkey, the United Kingdom, and the United States).
16 T urkey has long objected to Cypriot participation in NAT O-EU meetings on the grounds that Cyprus is not a
member of NAT O’s Partnership for Peace (PfP) and thus does not have a security r elationship with the alliance. T he
absence of Cyprus from PfP also hinders NAT O and the EU from sharing sensitive intelligence information.
Meanwhile, Cyprus has reportedly blocked various proposals over the years for enhancing NAT O -EU cooperation.
17 NAT O, “Joint Declaration by the President of the European Council, the President of the European Commission, and
the Secretary-General of the North Atlantic T reaty Organization,” press release, July 8, 2016.
18 NAT O, “Joint Declaration on EU-NAT O Cooperation,” press release, July 10, 2018.
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Like its predecessors, Trump Administration officials voiced a degree of support for EU defense
initiatives but also raised concerns that they could distract European al ies from their NATO
commitments or impede U.S.-European defense industrial cooperation.19 The Biden
Administration has sought to encourage EU defense efforts and has joined a PESCO project to
improve military mobility in Europe. At the same time, the United States continues to stress that
such EU initiatives must be linked to and help to bolster NATO. In a September 2021 statement
following a cal between President Biden and French President Emmanuel Macron (aimed at
easing U.S.-French tensions over a new Australia-UK-U.S. security pact for the Indo-Pacific), the
White House asserted that the United States “recognizes the importance of a stronger and more
capable European defense, that contributes positively to transatlantic and global security and is
complementary to NATO.”20 (Also, see “How Are Current U.S.-EU Relations?,” below.)
What Is Justice and Home Affairs?
The Justice and Home Affairs (JHA) field seeks to foster common internal security measures
while protecting the fundamental rights of EU citizens and promoting the free movement of
persons within the EU. JHA encompasses police and judicial cooperation, migration and asylum
policies, fighting terrorism and other cross-border crimes, and combating racism and xenophobia.
JHA also includes border control policies and rules for the Schengen area of free movement.
For many years, EU efforts to harmonize policies in the JHA field were hampered by member
states’ concerns that such measures could infringe on their legal systems and national sovereignty.
The 2001 terrorist attacks on the United States and subsequent attacks in Europe in the 2000s
galvanized progress in the JHA area. Among other steps, the EU has established a common
definition of terrorism, an EU-wide arrest warrant, and enhanced tools to stem terrorist financing.
The EU also has worked to bolster Europol, its joint agency for police cooperation. In recent
years, terrorist attacks in France, Belgium, Germany, Spain, and elsewhere have led the EU to
devote significant attention to combat those inspired by the Islamic State group (or ISIS/ISIL).21
The EU’s Lisbon Treaty gave the European Parliament “co-decision” power over the majority of
JHA policy areas. The Treaty also made most decisions on JHA issues in the Council of Ministers
subject to the qualified majority voting system, rather than unanimity, in a bid to speed EU
decisionmaking. In practice, member states largely continue to strive for consensus on sensitive
JHA policies. Moreover, for some issues in the JHA area, the EU added an “emergency brake”
that al ows any member state to halt a measure it believes could threaten its national legal system
and, ultimately, to opt out of the measure. Despite these safeguards, Ireland (along with the UK at
the time) negotiated the right to choose those JHA policies that it wished to take part in and to opt
out of al others, and Denmark extended its previous opt-out in some JHA areas to al JHA issues.
The Lisbon Treaty technical y renamed JHA as the Area of Freedom, Security, and Justice.

19 Aaron Mehta, “U.S. Cautiously Watching EU Military Proposal,” DefenseNews.com, February 13, 2018; Guy
Chazan and Michael Peel, “U.S. Warns Against European Joint Military Project,” Financial Times, May 14, 2019.
20 T he White House, “Joint Statement on the Phone Call between President Biden and President Macron,” September
22, 2021.
21 For more information, see CRS Report RS22030, U.S.-EU Cooperation Against Terrorism , by Kristin Archick, and
CRS In Focus IF10561, Terrorism in Europe, by Kristin Archick.
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What Is the Schengen Area?
The Schengen area of free movement encompasses 22 EU member states plus 4 non-EU
countries.22 Within the Schengen area, internal border controls have been eliminated, and
individuals may travel without passport checks among participating countries. In effect, Schengen
participants share a common external border where immigration checks for individuals entering
or leaving the Schengen area are carried out. The Schengen area is founded upon the Schengen
Agreement of 1985 (Schengen is the town in Luxembourg where the agreement was signed,
original y by five countries). In 1999, the Schengen Agreement was incorporated into EU law.
The Schengen Borders Code comprises a detailed set of rules governing both external and
internal border controls in the Schengen area, including common rules on visas, asylum requests,
and border checks. Provisions also exist that al ow participating countries to reintroduce internal
border controls for a limited period of time in cases of a serious security threat or exceptional
circumstances, such as a conference of world leaders or a major international sporting event.
Along with the abolition of internal borders, Schengen participants agreed to strengthen
cooperation between their police and judicial authorities in order to safeguard internal security
and fight organized crime. As part of these efforts, they established the Schengen Information
System (SIS), a large-scale information database that enables police, border guards, and other law
enforcement and judicial authorities to enter and consult alerts on certain categories of persons
and objects. Such categories include persons wanted for arrest, missing persons (including
children), criminal suspects, individuals who do not have the right to enter or stay in Schengen
territory, stolen vehicles and property, lost or forged identity documents, and firearms.
Four EU countries (Bulgaria, Croatia, Cyprus, and Romania) are not yet full Schengen members,
but are legal y obliged to join once they meet the required security conditions. Ireland has an opt-
out from the Schengen free movement area but takes part in some aspects of the Schengen
Agreement related to police and judicial cooperation, including access to the SIS.
Does the EU Have a Trade Policy and Process?
The EU has a common external trade policy, which means that trade policy is an exclusive
competence of the EU and no member state can negotiate its own international trade agreement.
The EU’s trade policy is one of its most wel -developed and integrated policies. It evolved along
with the common market—which provides for the free movement of goods within the EU—to
prevent one member state from importing foreign goods at cheaper prices due to lower tariffs and
then re-exporting the items to another member with higher tariffs. The scope of the common trade
policy has been extended partial y to include trade in services, the defense of intel ectual property
rights, and foreign direct investment. The European Commission and the Council of Ministers
work together to set the common customs tariff, guide export policy, and decide on any trade
protection or retaliation measures. EU rules al ow the Council to make trade decisions with
qualified majority voting, but in practice the Council tends to employ consensus.
The European Commission negotiates trade agreements with outside countries and trading blocs
on behalf of the EU as a whole. Both the Council of Ministers and the European Parliament must
approve al such trade agreements before they can enter into force. The process for negotiating

22 T he 22 EU members that belong to the Schengen area of free movement are Austria, Belgium, the Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, and Sweden. T he four non -EU members of the Schengen
area are Iceland, Liechtenstein, Norway, and Switzerland.
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and concluding a new international trade agreement begins with discussions among al three EU
institutions, and the commission initiates an informal scoping exercise with the potential partner
country or trade bloc. The commission then requests authorization from the Council to begin
negotiations and usual y submits to the Council negotiating directives (sometimes termed the
negotiating mandate), which set out the commission’s overal objectives for the future agreement.
The directives also are shared with the European Parliament.
Provided the Council provides authorization, the commission then launches formal negotiations
for the new trade agreement. Within the commission, the department that handles EU trade
policy—the Directorate General for Trade (DG Trade)—leads the negotiations. Typical y, there
are a series of negotiation rounds. The duration of the negotiations varies but can range from two
to three years or longer. During the course of negotiations, the commission is expected to keep
both the Council and the Parliament apprised of its progress. When negotiations reach the final
stage, both parties to the agreement initial the proposed accord. It is then submitted to the Council
and the Parliament for review.23 If the Council approves the accord, it authorizes the commission
to formal y sign the agreement.
Once the new trade accord is official y signed by both parties, the Council submits it to the
Parliament for its consent. Although the Parliament is limited to voting “yes” or “no” to the new
accord, it can ask the commission to review or address any concerns. If parts of the trade
agreement fal under member state competence, al EU countries must also ratify the agreement
according to their national ratification procedures. After Parliament gives its consent and
following ratification in the member states (if required), the Council adopts the final decision to
conclude the agreement. It may then be official y published and enter into force.24
How Do EU Countries and Citizens View the EU?
Member states have long believed that the EU magnifies their political and economic clout (i.e.,
the whole is greater than the sum of its parts). Nevertheless, tensions have always existed within
the EU between those members that seek an “ever closer union” through greater integration and
those that prefer to keep the bloc on a more intergovernmental footing in order to better guard
their national sovereignty. As a result, some member states over the years have opted out of
certain aspects of integration, including the eurozone and the Schengen area (this included the
UK, which traditional y was reluctant to cede too much sovereignty during its tenure as an EU
member state). Another classic divide in the EU fal s along big versus smal state lines; smal
members often are cautious of initiatives that they fear could al ow larger countries to dominate
EU decisionmaking.
In addition, different histories and geography may influence member states’ policy preferences.
The EU’s enlargement to the east has brought in many members with histories of Soviet control,
which may color their views on issues ranging from EU reform to relations with Russia to
migration; at times, such differences have caused frictions with older EU member states.
Meanwhile, southern EU countries that border the Mediterranean may have greater political and
economic interests in North Africa than EU members located farther north.
The prevailing view among European publics has likewise been historical y favorable toward the
EU. Many EU citizens value the freedom to easily travel, work, and live in other EU countries. At

23 Some trade agreements submitted for Council and Parliament approval are accompanied by Commission legislative
proposals needed for implementation, which must also be adopted by both the Council and the Parliament.
24 For more on the EU process for concluding new trade agreements, see European Commission, “Negotiating EU
T rade Agreements,” at http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149616.pdf.
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the same time, there has always been a degree of “euroskepticism”—or anti-EU sentiments—
among some segments of the European public. Traditional y, such euroskepticism has been driven
by fears about the loss of national sovereignty or concerns about the EU’s “democratic deficit”—
a feeling that ordinary citizens have no say over decisions taken in faraway Brussels.
For much of the past decade, however, Europe’s economic difficulties and worries about income
inequality, immigration, and globalization have heightened support for populist, antiestablishment
parties throughout Europe. Many of these parties also are considered euroskeptic, but they are not
monolithic. Although most of these parties are on the right or far right of the political spectrum, a
few are on the left or far left. Moreover, they hold a range of views on the future of the EU, with
some advocating for EU reforms and others cal ing for an end to the eurozone or the EU itself.
Austria, Denmark, Finland, France, Germany, Greece, Hungary, Italy, the Netherlands, Poland,
Spain, and Sweden are among those EU countries with prominent populist and, to at least some
extent, euroskeptic parties. Parties with moderately euroskeptic views lead the governments in
Poland and Hungary. In 2017, the euroskeptic, anti-immigrant, right-wing Alternative for
Germany party secured enough support in federal elections to enter parliament for the first time,
becoming the only far-right German political party to do so since the end of World War II. Such
parties have put pressure on mainstream parties to embrace some of their positions on issues such
as migration and further EU integration. The UK government’s decision to hold the 2016 public
referendum on continued EU membership was driven largely by increasing pressure from hard-
line euroskeptics, both within and outside of the governing Conservative Party.
In the May 2019 European Parliament elections, an array of antiestablishment and euroskeptic
parties secured up to 25% of seats. Traditional y, however, such parties in the Parliament have
struggled to form a cohesive opposition due to competing agendas and diverse views (including
on EU reforms, fiscal policy, migration, and Russia). In the current Parliament, some of the most
hardline euroskeptic parties on the right of the political spectrum have sought to overcome their
political fragmentation and have banded together to forge a larger euroskeptic group. Many
experts remain doubtful about the ability of such parties to work together to block or influence
legislation. Euroskeptic parties are stil a collective minority in the Parliament, and would have to
gain support from other groups to have much impact on the legislative process.25
Despite concerns about euroskepticism, opinion polls indicate that a majority of EU citizens are
supportive of the EU. Some analysts note that euroskeptic parties did not do as wel as expected
in the 2019 European Parliament elections. The difficulties encountered by the UK as it sought to
leave the EU appear to have dampened euroskeptic enthusiasm in other EU countries. Many
stridently euroskeptic parties, such as France’s National Ral y and the Netherlands’ Freedom
Party, have focused more on cal ing for EU reforms in recent years than on promoting the
dissolution of the eurozone or the EU itself. At the same time, experts caution that populism and
related euroskeptic sentiments remain potent political forces in Europe. Some suggest that
COVID-19’s economic chal enges could lead to increased support for antiestablishment, anti-EU
parties in the years ahead.26

25 For more information, see CRS In Focus IF11211, The European Parliament and U.S. Interests, by Kristin Archick.
26 “Populists Fall Short of Expectations in the European Elections,” Economist, May 26, 2019; Eurobarometer Survey,
Parlem eter 2019 Heeding the Call Beyond the Vote, commissioned for the European Parliament, October 2019;
Yasmeen Serhan, “T he Pandemic Isn’t a Death Knell for Populism,” The Atlantic, August 22, 2020.
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What Is Brexit, and How Has It Affected the EU?
The UK had long been considered one of the most euroskeptic members of the EU, with many
British leaders and citizens traditional y cautious of ceding too much sovereignty to Brussels.
Brexit—or the UK’s withdrawal from the EU—stems from a June 2016 public referendum in the
UK on whether the country should remain a member of the EU. UK voters favored leaving the
EU by 52% to 48%. Several factors heavily influenced this outcome, including economic
dissatisfaction, fears about globalization and immigration, and anti-elite and antiestablishment
sentiments. The UK government enacted the results of the Brexit referendum in March 2017,
when it invoked Article 50—the so-cal ed exit clause—of the Treaty on European Union. The UK
and the EU subsequently began negotiations on the terms of the UK’s withdrawal.
UK-EU negotiations on the withdrawal agreement proved complicated and lengthy. Chal enges
related to maintaining an open border between Northern Ireland (part of the UK) and the
Republic of Ireland (an EU member state) were key stumbling blocks. In October 2019, the UK
and EU agreed that post-Brexit, in order to ensure an open border on the island of Ireland and
preserve the peace process, Northern Ireland would effectively remain in the EU’s single market
and customs union. This arrangement would eliminate the need for regulatory and customs
checks on trade in goods on the Northern Ireland land border, but it also essential y created a
customs border in the Irish Sea between Northern Ireland and the rest of the UK (i.e., Great
Britain) to safeguard the rules of the EU single market.
Days before the end of the transition period in December 2020, the UK and the EU concluded a
1,200-page Trade and Cooperation Agreement (TCA), along with two other accords on nuclear
cooperation and on protecting the security of classified information. Since the post-Brexit
arrangements for Northern Ireland took effect in January 2021, however, implementation
difficulties have disrupted some trade between Northern Ireland and Great Britain, heightened
political and societal divisions within Northern Ireland, and significantly strained UK-EU
relations. The EU rejects cal s by the UK government and some in Northern Ireland to renegotiate
the post-Brexit rules for the region, but the EU is engaged in talks with the UK to overcome the
operational chal enges and ease tensions in Northern Ireland.
Despite Brexit, EU leaders assert that “the Union of 27 countries wil continue.”27 However, the
UK was the bloc’s second-largest economy and, along with Germany and France, was regarded
as one of the EU’s “big three.” Many observers view the EU as having taken a tough line in the
withdrawal agreement and subsequent trade agreement negotiations—refusing to al ow the UK to
cherry-pick the benefits of the EU without taking on the required obligations—in part to
discourage other member states and euroskeptic publics from contemplating a break with the EU
that would further fracture the bloc. Some in the EU continue to express concerns that the UK
could become an economic competitor, especial y if the UK were to diverge significantly from
EU environmental, labor, or state aid standards in ways that could give UK businesses a trade
advantage. Other experts argue that Brexit could reduce the EU’s influence on the world stage,
given that the EU now finds itself without the UK’s diplomatic, military, and economic clout. At
the same time, some contend that Brexit ultimately could lead to a more like-minded EU, able to
pursue deeper integration without UK opposition.28

27 European Council, “Statement by the EU Leaders and the Netherlands Presidency on the Outcome of the UK
Referendum,” press release, June 24, 2016.
28 For more information, see CRS Report R46730, Brexit: Overview, Trade, and Northern Ireland, coordinated by
Derek E. Mix.
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How Might the EU Evolve in the Future?
In light of Brexit and other chal enges, the EU has faced questions about its future shape and
character. In June 2016, EU leaders announced the launch of a “political reflection” process to
consider the EU’s future.29 The EU concluded its reflection process in March 2017 during its
commemoration of the 60th anniversary of the Treaties of Rome (foundational EU treaties). In the
60th anniversary Rome Declaration, the leaders of the EU-27 renewed their commitment to the
European integration project, acknowledged the chal enges facing the EU, and pledged to “make
the European Union stronger and more resilient, through even greater unity and solidarity
amongst us.”30 Some experts argue that “more EU” and further integration is necessary to better
address the range of political and economic issues confronting the bloc. Others are skeptical that
national governments wil be inclined to cede more authority to a Brussels bureaucracy viewed as
opaque and out of touch with the problems of average Europeans.
Considerable attention since 2016-2017 has focused on developing a “multispeed EU,” in which
some member states could agree to greater integration in certain areas and others could opt out.
Some European policymakers and analysts suggest that such a multispeed EU already exists in
practice, with varying membership on a range of EU initiatives, including the eurozone,
Schengen, justice and home affairs issues, and defense policy. Critics contend, however, that
making the multispeed concept central to the EU’s identity could be divisive, undermine EU
solidarity, and potential y lead to different classes of EU membership.31
Although the EU has not made a formal decision to move toward a multispeed EU, momentum
exists for greater integration in some areas. In particular, EU leaders have announced several new
initiatives to bolster security and defense cooperation (as discussed in “Does the EU Have a
Defense Policy?”). For several years, Germany and France have cal ed for eurozone reforms, and
some analysts suggest that the July 2020 decision to establish common EU bonds as part of the
EU’s COVID-19 recovery plans could spark further EU economic integration. Other experts
remain skeptical, however, given ongoing concerns in many member states about maintaining
fiscal sovereignty and hesitancy from fiscal y conservative member states in particular.32
In May 2021, the EU launched a Conference on the Future of Europe to promote dialogue on a
wide range of topics among citizens, experts, and EU officials; the Conference is expected to
conclude work and offer recommendations in spring 2022.33 How the EU evolves in the years
ahead may be affected by Germany’s September 2021 federal elections and Chancel or Angela
Merkel’s impending departure from office.34 Germany—often in conjunction with France—
traditional y plays a key role in EU policymaking, and Merkel has led the EU’s response to major
chal enges over the past 16 years. The outcome of France’s presidential election scheduled for
April 2022 also could have implications for the future of the EU project.

29 European Council, Informal Meeting at 27, June 29, 2016, at https://www.consilium.europa.eu/media/20462/
sn00060-en16.pdf.
30 European Council, The Rome Declaration, March 25, 2017, at https://www.consilium.europa.eu/en/press/press-
releases/2017/03/25/rome-declaration.
31 Maia de la Baume, “Multispeed Europe: T he EU’s Loch Ness Monster,” Politico Europe, March 10, 2017; Matthew
Karnitschnig, “With Plenty of Pomp, Europe’s Leaders Renew Vows,” Politico Europe, March 24, 2017.
32 See, for example, “Judy Asks: Should the Coronavirus Accelerate European Integration?,” CarnegieEurope.eu,
March 4, 2021; “Europe’s Radical Economic Response to Covid-19,” The Economist, March 31, 2021.
33 Conference on the Future of Europe, What Is the Conference on the Future of Europe, at https://futureu.europa.eu/
pages/about.
34 See CRS Insight IN11755, Germany’s September 26 Elections, by Paul Belkin.
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Does the United States Have a Formal Relationship
with the EU?
For decades, the United States and the EU (and its predecessor institutions) have maintained
diplomatic and economic ties. The 1990 U.S.-EU Transatlantic Declaration set out principles for
greater consultation, and established regular summit and ministerial meetings. In 1995, the New
Transatlantic Agenda (NTA) and the EU-U.S. Joint Action Plan provided a framework for
promoting stability and democracy together, responding to global chal enges, and expanding
world trade. The NTA also sought to strengthen individual, people-to-people ties across the
Atlantic, and launched a number of dialogues, including ones for business leaders and legislators.
The Transatlantic Legislators’ Dialogue (TLD) has been the formal mechanism for engagement
and exchange between the U.S. House of Representatives and the European Parliament since
1999, although inter-parliamentary exchanges between the two bodies date back to 1972.
Who Are U.S. Officials’ Counterparts in the EU?
During U.S.-EU summits, the U.S. President meets with the President of the European
Commission and the President of the European Council. The U.S. Secretary of State’s most
frequent interlocutor in the EU context is the High Representative for the Union’s Foreign Affairs
and Security Policy. The U.S. Trade Representative’s key interlocutor is the European
Commissioner for Trade, who directs the EU’s common external trade policy. Other U.S.
Cabinet-level officials interact with Commission counterparts or member state ministers in the
Council of Ministers formation as issues arise. Many working-level relationships between U.S.
and EU officials also exist. A delegation in Washington, DC, represents the European Union in its
dealings with the U.S. government, while the U.S. Mission to the European Union represents
Washington’s interests in Brussels.
What Is the History of U.S.-EU Relations?
Successive U.S. Administrations and many Members of Congress have long viewed the European
integration project as a way to foster democratic al ies and strong trading partners in Europe. In
the immediate aftermath of World War II, the United States supported the European integration
project as a way to promote political reconciliation (especial y between France and Germany),
boost economic recovery, and prevent another catastrophic war on the European continent.
During the Cold War, the European integration project—and the peace and prosperity it helped to
engender in Western Europe—was considered central to deterring the Soviet threat. With the end
of the Cold War, the United States strongly backed EU efforts to extend the political and
economic benefits of membership to Central and Eastern Europe. The United States also
traditional y has supported the EU aspirations of Turkey and the Western Balkan states.
Over the past 25 years, the United States has often looked to the EU for partnership on common
foreign and security policy concerns worldwide, and the two partners have a strong track record
of cooperation. The United States and the EU have promoted peace and stability in various
regions and countries (including the Balkans, Afghanistan, and Africa); enhanced law
enforcement and counterterrorism cooperation; and sought to tackle cross-border chal enges, such
as cybersecurity. Since 2014, the United States and the EU also have imposed sanctions on Russia
(including those targeting key sectors of the Russian economy) in response to Russia’s
annexation of Ukraine’s Crimea and its support for separatists in eastern Ukraine.
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The United States and the EU also share an extensive and interdependent economic relationship.
Trade and investment ties have deepened and evolved over time. Total U.S. trade in goods and
services with the EU is typical y around $1 tril ion per year. The United States and the EU are
each other’s largest source and destination for foreign direct investment. Total stock of two-way
direct investment is nearly $6 tril ion, and U.S. and EU multinational firms employ nearly 9
mil ion workers (in direct employment) on both sides of the Atlantic. Historical y, U.S.-EU
cooperation has been a driving force behind efforts to liberalize world trade and ensure the
stability of international financial markets.35
At times, however, the U.S.-EU relationship has faced serious chal enges. U.S.-EU relations hit a
low point in 2003 over the U.S.-led invasion of Iraq, which some EU members supported and
others strongly opposed. Long-standing U.S.-EU trade disputes persist over poultry,
bioengineered food products, and protection of geographical indications. Data protection and
balancing privacy and security have been key U.S.-EU sticking points for years; EU concerns
about what it views as insufficient U.S. data privacy and protection safeguards have put pressure
on U.S.-EU law enforcement information-sharing agreements and commercial data transfers.
Despite periodic frictions in the past, U.S.-EU relations came under significant pressure during
the former Trump Administration. Many EU leaders were taken aback by President Trump’s
seeming hostility toward the bloc and its skepticism of the EU’s value as an institution. Former
President Trump expressed support for Brexit. He also contended that the EU engaged in unfair
trade practices that harmed U.S. economic interests.36 EU officials were concerned by the Trump
Administration’s imposition of steel and aluminum tariffs and what it regarded as protectionist
U.S. trade policies.
Numerous U.S.-EU policy divisions also emerged during the Trump Administration, including on
aspects of relations with Russia and China, Syria, the Israeli-Palestinian conflict, and the role of
multilateral institutions such as the United Nations and the World Trade Organization (WTO).
The EU opposed the Administration’s decisions to withdraw from the 2015 multilateral nuclear
deal with Iran and the Paris Agreement on combatting climate change. COVID-19-related
issues—including the imposition of U.S. and EU travel bans; competition for medical equipment,
supplies, and the research and development of vaccines and treatments; and the Trump
Administration’s decision to withdraw the United States from the World Health Organization—
further strained the U.S.-EU partnership.37
Despite the heightened difficulties, the EU pursued cooperation with the Trump Administration
where possible. The two sides attempted to deescalate trade tensions, in part through pursuing a
U.S.-EU trade liberalization agreement (although talks stal ed amid discord on their scope,
especial y with respect to agriculture). The EU sought to work with the Trump Administration on
areas such as counterterrorism, cybersecurity, and WTO reform. U.S. and EU scientific and
regulatory experts established technical dialogues on pandemic-related issues. In October 2020,
the Trump Administration and the EU launched a dialogue on China to discuss both common
concerns and differences in U.S. and European views.

35 Also, see CRS In Focus IF10930, U.S.-EU Trade and Investment Ties: Magnitude and Scope, by Shayerah I. Akhtar.
36 See, for example, “‘I T hink the European Union is a Foe,’ T rump Says Ahead of Putin Meeting in Helsinki,”
CBSNews.com, July 15, 2018.
37 For more information on U.S.-EU relations during the T rump Administration, see CRS Report R45745,
Transatlantic Relations: U.S. Interests and Key Issues, coordinated by Kristin Archick.
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How Are Current U.S.-EU Relations?
With the entrance into office of the Biden Administration, EU leaders hoped to renew and
strengthen relations with the United States. President Biden “underscored his support for the [EU]
and his commitment to repair and revitalize the U.S.-EU partnership.”38 The Administration
sought to reset diplomatic relations and rebuild trust with the EU, in part through enhanced
engagement. President Biden, for example, participated in a meeting with al 27 EU leaders in
March 2021. EU officials welcomed the notion that “America is back” and the renewed U.S.
commitment to multilateralism—signaled, for example, by President Biden’s decision to reverse
Trump Administration policies and rejoin the World Health Organization and the Paris climate
agreement, as wel as U.S. engagement on ways to revive the 2015 nuclear deal with Iran.39
The Biden Administration views cooperation with European democracies and the EU as key to
countering chal enges posed by China, Russia, and other authoritarian systems of government.
The Biden Administration has coordinated human rights-related sanctions on Russian and
Chinese officials and restarted the U.S.-EU dialogue on China begun during the Trump
Administration. At their June 2021 summit, the United States and the EU committed to work
together on four key areas: ending the COVID-19 pandemic; addressing climate change and other
environmental chal enges; strengthening trade, investment, and technological cooperation; and
supporting democracy and global security.40
Of particular note, U.S. and EU leaders at the June summit decided to launch two new
dialogues—a Trade and Technology Council (to promote greater cooperation in areas such as
standards on emerging technologies, supply chain security, digital governance, and export
controls) and a Joint Technology Competition Policy Dialogue. The two sides also pledged to
reach a resolution by the end of the year on the steel and aluminum tariffs imposed by the Trump
Administration and announced an agreement that aims to defuse a long-standing U.S.-EU dispute
over subsidies to their respective large civil aircraft (LCA) companies, Boeing and Airbus.41 As
part of the LCA accord, the United States and the EU announced they would suspend retaliatory
tariffs for five years, agree terms for state support for civil aircraft manufacturers, and work
together to address practices of nonmarket economies (such as China) in the sector. 42
Despite the improved tenor of U.S.-EU relations with the start of the Biden Administration,
differences in perspective have persisted on various issues. Like the Trump Administration, the
Biden Administration opposed the Nord Stream 2 gas pipeline project (from Russia to Germany)
on grounds that it would entrench European energy dependence on Russia and undermine
Ukraine. Despite similar concerns about Nord Stream 2 in the European Commission and among
some EU member states, EU officials condemned possible U.S. sanctions on European entities or
citizens involved in the pipeline, rejecting as a matter of principle any such sanctions on those
conducting legitimate business in line with EU and European law.43 Additional y, although EU

38 T he White House, “Readout of President Joseph R. Biden, Jr. Call with European Commission President Ursula von
der Leyen,” press release, March 5, 2021.
39 European Council, “ Introductory Remarks by President Charles Michel at the Videoconference of EU Leaders with
US President Biden,” March 25, 2021.
40 T he White House, U.S.-EU Summit Statement, June 15, 2021.
41 See CRS In Focus IF11364, Boeing-Airbus Subsidy Dispute: Recent Developments, by Andres B. Schwarzenberg.
42 Office of the United States T rade Representative, “ UST R Announces Joint U.S.-E.U. Cooperative Framework for
Large Civil Aircraft ,” press release, June 15, 2021.
43 “European Commission President Criticizes U.S. Nord Stream Sanctions,” RFE/RL, December 27, 2019.
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views toward China appear to be hardening due to the country’s military assertiveness, human
rights practices, and other concerns, many in the EU remain wary about a possible new U.S.-
China “Cold War” and mindful of the bloc’s significant economic ties with China.44
EU officials also have expressed frustration that the Biden Administration has not lifted the steel
and aluminum tariffs imposed by the former Trump Administration. EU leaders reacted coolly to
President Biden’s support for waiving intel ectual property rights on COVID-19 vaccines under
the WTO’s Trade Related Intel ectual Property Rights (TRIPS) Agreement.45 Although both the
United States and the EU appear committed to cooperating on climate chal enges, U.S. officials
express concern about the potential trade implications of the EU’s proposed carbon border
adjustment mechanism (a carbon tax on selected imports aimed at reducing risks to
competitiveness from countries with less ambitious climate policies).46 U.S.-EU frictions on
cross-border data flows, privacy, and digital technology issues also remain.47
Other issues have emerged and chal enged U.S.-EU relations further. EU officials were critical of
the U.S. withdrawal from Afghanistan in August 2021 and troubled by the takeover of the country
by the Taliban, in part because of concerns that the situation could lead to increased migrant and
refugee flows to Europe.48 The U.S. decision to withdraw its forces exposed weaknesses in
European capabilities, as European governments concluded that they could not safely remain in
Afghanistan without U.S. military support. Moreover, some European officials contended that the
U.S. decision to withdraw its forces was undertaken without sufficient consultation.49
In September 2021, EU officials expressed dismay with a new security pact between Australia,
the UK, and the United States (known as AUKUS) for the Indo-Pacific region. AUKUS is widely
regarded as aimed at addressing concerns about China, but EU officials contend that the bloc was
not consulted and should have been, in the interest of transatlantic unity and transparency. France
in particular was angered by AUKUS, under which Australia canceled a roughly $66 bil ion
contract for French diesel-powered submarines in favor of acquiring longer-range nuclear-
powered ones (with U.S. and UK assistance). French and EU officials maintain that the new pact
raises doubts about the U.S. commitment to transatlantic cooperation on China. The controversy
over AUKUS also has heightened EU fears about a U.S. “pivot” toward Asia and whether this

44 Daniel Baer, “In Historic Shift, Biden Aligns Allies on China,” ForeignPolicy.com, June 22, 2021; Stephen Erlanger,
“T he Sharp U.S. Pivot to Asia Is T hrowing Europe Off Balance,” New York Times, September 17, 2021; and Anders
Fogh Rasmussen, “Europe’s Complacency Heightens the China Challenge,” Wall Street Journal, October 10, 2021.
45 See CRS In Focus IF11858, Potential WTO TRIPS Waiver and COVID-19, by Shayerah I. Akhtar and Ian F.
Fergusson.
46 Jakob Hanke Vela, “Biden Makes the EU Look Like the Bad Guys,” Politico Europe, May 6, 2021; Justin Worland,
“John Kerry on Border Carbon T ax: T he U.S. Doesn’t Want to Push Ot hers Away,” Time, July 26, 2021.
47 In July 2020, the Court of Justice of the European Union (CJEU) invalidated a U.S.-EU commercial data transfer
accord, the U.S.-EU Privacy Shield Framework. T he CJEU found that Privacy Shield failed to meet EU data protection
standards due to U.S. surveillance laws and a lack of judicial redress. T hese issues remain key sticking points in the
ongoing U.S.-EU negotiations on a successor to Privacy Shield. For more information, see CRS Report R46917, U.S.-
EU Privacy Shield and Transatlantic Data Flows, by Kristin Archick and Rachel F. Fefer.
48 European External Action Service, “Press Remarks by the High Representative Josep Borrell After Extraordinary
Videoconference of the EU Foreign Ministers,” August 17, 2021; European Commission, “Statement by Commissioner
Johansson on the Situation in Afghanistan at the Extraordinary Meeting of Interior Ministers,” press release, August 18,
2021.
49 See, for example, Steven Erlanger, “Afghanistan Fiasco Raises Hard Questions for Europe,” New York Times,
August 31, 2021.
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could portend diminished U.S.-European ties in the future. In addition, the rift over AUKUS
threatened to derail the first meeting of the new U.S.-EU Trade and Technology Council (TTC).50
These incidents have reinforced EU questions that surfaced during the Trump Administration
regarding whether the United States wil remain a credible, reliable partner in the longer term.
The U.S. withdrawal from Afghanistan and European concerns about AUKUS may bolster
arguments within the EU for enhancing defense capabilities and for pursuing greater EU strategic
autonomy more broadly. Although successive U.S. Administrations have supported EU defense
initiatives in principal, the EU has consistently faced chal enges in transforming its aspirations
into more robust military capabilities, and U.S. and NATO officials have long cautioned that such
efforts must not compete with or duplicate NATO.51
Regarding other aspects of strategic autonomy, the EU has concluded new trade agreements
(including with Canada, Japan, and Latin America) in recent years and has sought to become a
global standard setter on data protection and climate change mitigation. Efforts to position the EU
as a key international player in these and other policy spheres are likely to remain EU imperatives
amid concerns about U.S. political polarization and ongoing doubts about the degree to which the
EU wil be able to rely on U.S. cooperation and global leadership in the long term.52
At the same time, U.S. and EU officials have attempted to deescalate frictions. In a cal with
European Commission President Ursula von der Leyen in early October 2021, President Biden
“reaffirmed his support for the European Union, a fundamental partner for the United States, and
his commitment to continue implementing the outcomes from the June U.S.-EU Summit.”53 The
EU ultimately agreed to hold the first TTC meeting at the end of September 2021, reportedly after
some member states argued that launching the TTC and preserving U.S.-EU cooperation were
more important than the dispute over AUKUS.54 U.S. officials also maintain that consultations
with the EU since the start of the Biden Administration have been “quite intensive,” but the
Administration has sought to respond to EU concerns and is committed to sustained diplomatic
engagement with the EU and its member states.55

50 Matthew Lee, “Biden Angers France, EU with New Australia, UK Initiative,” Associated Press, September 16, 2021;
David M. Herszenhorn, “EU Leaders Accuse Biden of Disloyalty to Allies,” Politico Europe, September 21, 2021; and
Walter Russell Mead, “In Europe, Confusion Reigns About the U.S.,” Wall Street Journal, October 25, 2021.
51 See, for example, John Hudson and Missy Ryan, “Withdrawal from Afghanistan Forces Allies and Adversaries to
Reconsider America’s Global Role,” Washington Post, August 17, 2021; Sophia Besch and Luigi Scazzieri, “After
Afghanistan and AUKUS: What Next for European Defence?,” Centre for European Reform, October 7, 2021.
52 See, for example, Steven Erlanger, “Europe Wonders If It Can Rely on U.S. Again, Whoever Wins,” New York
Tim es, October 22, 2020; Ivan Krastev and Mark Leonard, “ T he Crisis of American Power: How Europeans See
Biden’s America,” European Council on Foreign Relations, January 19, 2021; and David M. Herszenhorn and Laurens
Cerulus, “T he Joe T hey Don’t Know: Europe Reckons with Biden’s Asia Push,” Politico Europe, September 25, 2021.
53 T he White House, “Readout of President Joseph R. Biden, Jr.’s Call with European Commission President Ursula
von der Leyen,” press release, October 4, 2021.
54 Barbara Moens and Jacopo Barigazzi, “EU’s Free-traders Defeat French Push to Punish US,” Politico Europe,
September 24, 2021; Henry Foy and Sam Fleming, “European Defence: T he Quest for Strategic Autonomy,” Financial
Tim es, September 27, 2021.
55 David M. Herszenhorn, “Biden’s T op Security Adviser Sees Strong T ran satlantic Alliance (and No Jumping in
Lakes),” Politico Europe, October 8, 2021.
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Appendix. Map of the European Union and
Aspirant Countries
Figure A-1. European Union Member States and Candidates

Source: Created by the Congressional Research Service.

Author Information

Kristin Archick

Specialist in European Affairs

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Congressional Research Service
RS21372 · VERSION 60 · UPDATED
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