Definition
The Lisbon Treaty is a significant agreement in the European Union (EU) signed in Lisbon in 2007, enhancing the efficiency and democratic legitimacy of the EU and improving its capacity to address global challenges such as climate change, security, and sustainable development. Its impact has been substantial, creating a permanent President of the European Council and a High Representative for Foreign Affairs to give the EU a greater voice on the global stage. Opinions on the Treaty are diverse and subjective, some viewing it as a key step towards European integration, while others perceive it as further infringement on national sovereignty.
Phonetic
“Lisbon Treaty: History, Impact and Opinions”Phonetically, this is pronounced:Liz-buh n Tree-tee: His-toh-ree, Im-pakt and Uh-pin-yuh nz
Key Takeaways
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- History: The Lisbon Treaty, or Treaty of Lisbon, was signed on December 13, 2007, and entered into force on December 1, 2009. It had been proposed to amend the precedent treaties of the European Union (EU) with the aim to make the EU “more democratic, more transparent and more efficient”. It comprised the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU).
- Impact: The Lisbon Treaty introduced significant changes. It turned the Charter of Fundamental Rights of the EU into a legally binding document, strengthening human rights protection. It also made the EU acquire legal personality, enabling it to sign international agreements. This led to an increase in the decision-making power of the European Parliament, strengthening of the position of the High Representative of the Union for Foreign Affairs and Security Policy and introduced the role of the President of the European Council held by a single person instead of rotating between member states every semester.
- Opinions: Opinions on the Lisbon Treaty are varied. Proponents argue that it has streamlined EU processes, made the EU more democratic and brought the organizations and processes closer to citizens. Critics, however, fear that the Treaty transfers too much power to Brussels and undermines national sovereignty of member states. They argue that it embodies a move towards a ‘federal’ Europe and takes decision making too far away from citizens.
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Importance
The Lisbon Treaty, a significant milestone in the history of the European Union, plays a crucial role in business and finance because it represents a primary overhaul of the regulations that bind the member countries, thus directly affecting market operations within the bloc. It increased the EU’s ability to operate as a unified whole, thus making the business environment more predictable for companies operating within or engaging with member countries. Its impact was transformative, centralizing decision-making processes, amplifying the influence of the European Parliament, and introducing a permanent President of the European Council. Opinions on the treaty vary widely, with proponents lauding its efforts to streamline EU operations and critics denouncing its weakening of national sovereignty. Therefore, understanding the Lisbon Treaty’s history, its impact and divergent opinions on it are fundamental for business and finance operators navigating the European market.
Explanation
The Lisbon Treaty is a significant agreement in the domain of international finance and business, with its objective primarily focused on streamlining and improving the efficiency of the European Union (EU) operations. The treaty, signed in Lisbon in 2007, is intended to enhance the democratic nature of the EU and its capacity to defend the rights of its citizens, while promoting efficiency and coherence in its actions. Under the Lisbon Treaty, decision-making has become more efficient with the introduction of qualified majority voting in several areas. Also, it has equipped the EU with a legal personality, enabled it to sign international agreements, and interact on the global stage.The impact of the Lisbon Treaty is far-reaching. It significantly altered the way the EU functions, reshaped the balance of power within the bloc, and influenced the Union’s interaction with members and non-member states. For instance, it led to the creation of the role of the President of the European Council and the High Representative for Foreign Affairs and Security Policy, strengthening the Union’s voice in the international arena. Among a plethora of opinions, some laud the treaty for consolidating the EU’s power structure and enhancing its global standing. Conversely, critics argue that it has centralized power excessively, potentially eroding national sovereignty. Overall, it is a vital tool in continually shaping the EU’s functionality and its relations on the global stage.
Examples
1. Brexit: The United Kingdom’s exit from the European Union, or Brexit, is an example of how the Lisbon Treaty has had real-world impacts. Under the terms of the Lisbon Treaty, the UK was compelled to follow a specific protocol, enshrined in Article 50, to legally withdraw from the EU. This included a two-year negotiation period which began after the UK formally announced its intention to leave. The treaty mandated that any member state wishing to exit the EU would have to do so in an orderly and legal manner.2. Enlargement of the European Union: Since the Lisbon Treaty came into effect, several countries have joined the EU, including Croatia in 2013. The Treaty provides a framework and set of procedures for the continued expansion of the EU, outlining the conditions for entry and the rights and responsibilities of member states.3. Economic Crisis: The Lisbon Treaty was ratified shortly before the global financial crisis of 2008-09, which had significant impacts on the economies of member states and led to discussions about economic reforms and fiscal integration within the EU. The Treaty was referenced during the resolution of the Greek debt crisis, in relation to the powers of the European Central Bank and the obligations of the EU member states to support each other financially. Furthermore, the implementation of the Treaty resulted in more coordinated economic governance and European-Union wide responses to economic downturns.
Frequently Asked Questions(FAQ)
What is the Lisbon Treaty?
The Lisbon Treaty is an agreement that brought amendments to the two treaties which form the constitutional basis of the European Union (EU). It was signed by EU member states on 13 December 2007 and came into force on 1 December 2009.
Why was the Lisbon Treaty created?
This treaty was created to reform the functioning of the European Union following the two consecutive enlargements of 2004 and 2007 which increased the membership from 15 to 27.
What impact did the Lisbon Treaty have on finance and business?
The treaty provided the EU with modern institutions and optimised working methods to tackle both efficiently and effectively today’s challenges in today’s world. In the areas of finance and business, this translated into clearer rules for fiscal policy and a stronger representation for the EU in discussions of global economic issues.
What is the Charter of Fundamental rights in the context of the Lisbon Treaty?
This Charter, enshrined in the Lisbon Treaty, sets out the civil, political, and social rights of every citizen in the EU, impacting legislation in areas like labor law and business regulation.
Does the Lisbon Treaty affect non-EU countries?
While the treaty primarily impacts EU countries, it also influences global policy making and business practices as it strengthens the EU’s ability to act as a unified body in global negotiations.
What was the public opinion regarding the Lisbon Treaty?
The public opinion varies greatly. While some argued that the treaty would lead to a more efficient and coherent EU, others voiced concerns about potential loss of sovereignty and national identity due to increased political integration.
What are some key historical events related to the Lisbon Treaty?
Key historic events include the signing of the treaty in 2007, the Irish referendum rejecting the treaty in 2008, a second Irish referendum approving the treaty in 2009, and the treaty officially taking effect on December 1, 2009.
How has the Lisbon Treaty impacted the economy of member states?
The impact of the Lisbon Treaty varies by member state, but overall, it has allowed for a more streamlined approach to policy making, facilitating economic integration and growth within the EU. However, some critics argue that it has also centralized too much power within EU institutions.
What was the status of the Lisbon Treaty and the United Kingdom?
The United Kingdom ratified the Lisbon Treaty in 2008. However, following a referendum in 2016, the UK formally left the EU in 2020, no longer obligated to the terms of the Lisbon Treaty.
Related Finance Terms
- European Union Integration: This refers to the process of political, economic, and legal integration of European countries, which was further deepened by the Lisbon Treaty.
- Charter of Fundamental Rights: Enlisted in the Lisbon Treaty, it outlines various political, social, and economic rights for European Union citizens and residents.
- Enlargement of EU: This is a significant effect of the Lisbon Treaty, as it reformed decision-making procedures to accommodate an expanding membership.
- Qualified Majority Voting (QMV): The Lisbon Treaty enhanced the QMV, making decision-making more efficient in the Council of the European Union.
- Eurozone Crisis Opinion: Post Lisbon Treaty, opinion about its effectiveness has often been linked to its role in handling the Eurozone Crisis.
