Analysis of Differentiated Integration in the European Union (EU)

This essay provides an in-depth analysis of the differentiated integration within the European Union (EU). It begins by defining differentiated integration and its significance, particularly since the 1990s, highlighting the expansion of EU policies and membership. The essay then explores the monetary policy of the EU through the lens of Balassa's model of economic integration, which outlines stages from free trade to complete economic integration, and Schimmelfennig's framework for understanding different types of differentiation (horizontal and vertical). The analysis focuses on the application of these models to the EU's monetary union, examining the varying levels of integration among member states, especially concerning the adoption of the Euro. The essay further discusses the politicization of national currencies, illustrating how countries like the UK and Denmark have opted out of the Euro due to concerns about sovereignty and public opinion. It concludes by emphasizing that differentiated integration is not a flaw in the EU system, but rather a reflection of diverse national interests and political landscapes. The essay also references the impact of the European Monetary Policy (EMU) and its influence on the integration process, along with the increasing horizontal differentiation and interdependence among the member states.

Politics and Political
Economy

EUROPEAN UNION (EU) INTEGRATION IS BECOMING
INCREASINGLY DIFFERENTIATED
European Union (EU) which is a developed and bounded under a Regional Trade
Agreement (RTA). A treaty takes placed between two or more countries and their governments
in which they define the rules, regulations and responsibilities of trade amongst member states.
There are number of other examples as well of a Regional Trade Agreements like Asia-Pacific
Economic Cooperation (APEC). Since, the year 1990's, the integration of European Union is
becoming more and more differentiated and it is being denoted as differentiated integration.
The period of 1990's was recognised as a huge growing and developing one and
addressed as a far reaching extension of EU polices and scope in internal market and leading to a
result of doubling the member states by 12 to 28. The Union is in on-going process of
negotiation and revision of their treaty which is revolving around making betterment in their
framework and accession or additions of more and more candidates as members in the group. In
order to be more specific and analytical the monetary policy of European Union (EU) is being
explore by on the basis of Balassa's economic differentiation process. According to this system
the economic integration is elaborated as a procedure by which discrimination amongst areas
needs to be removed and abolished from the jurisdictions.
Thus, Balassa's have also determined the difference between cooperation and integration
as everyone has their own views over it and as per Balassa's integration is a component which
restricts discrimination rather then reducing it. For supporting the examination and elaboration of
the monetary policy another framework is being used that is provided and extracted by
Schimmelfennig's which demonstrates on the co-existence types of differentiation. Through the
usage of this model the illustration is focused on the how a single and only currency can easily
represents the differentiating nature of European Union (EU).
In regards to the application of the model it will be defining and measuring the difference
in integration processes between countries which holds membership of European Union (EU)
and are part of monetary union as well and of those who are members but are not involved in
Monetary Union. There are five stages in the Balassa's model of economic integration which are
as follows. a.) A Free Trade Agreements which belongs to the no tariffs zone as they are
eliminated, b.) A Custom Union, in which tariffs are decides and placed by member states
externally , c.) A Common Market, where trade can take placed amongst all member as per their

will and with ease, d.) An Economic Union, here all the economic polices of member states are
harmonized with one another for developing synergy in between member states and last but not
the least e.) Complete Economic Integration, here all forms and types of polices such as social,
fiscal etc. are unified and the decisions of a Supra-national Authority is followed for bing the
member states together and as a bundle of power.
In regards to the framework of Schimmelfennig's differentiation there are two ways by
which the differentiation can be assessed and examined in relation to European Union (EU)
member and the Monetary Union. These ways are Horizontal and Vertical, in the first one
differentiation is measure by the scope of territory and the second id based on the extent to which
the policy is governed centrally and by the states collectivising jurisdiction. One is based on the
number of participants and the next one is based on the extent of their involvement. Moving
along, as per the case of Monetary Union it can be identified that internal differentiation is
strictly featured for induced involvement of politicization and politics as well as dependency of
member states on one another. Hence, it will be demonstrating the systematic nature of
differentiation in European Union (EU) and can be concluded in the favour of the topic of
discussion of about integration being differentiated.
Once the model is examined and the statement is justified more evidence which can more
further support it are, since the year 1999 the beginning of virtual ear and the world of
technology and internet the European Monetary Policy (EMU) which is created with the opinion
of integration and differentiation needs to acknowledge the development. Their is no doubt in the
fact that every aspect of European Union (EU) policy making is developed with certain view
point which is separated and unique from other. Hence, it is evident as well that some the polices
will be integrated but may be partially differentiated or may be entirely differentiated depending
upon the system, the political environment and its interdependency over each other. Thus, with
the passage of the actions the level of indifference and variation of integration of policies with
one another is providing the evident and proven differentiation of European Union (EU). As per
the requirements and stages of the integration model process and aspects it is determined that the
member candidate of European Union have reached to different and unbounded levels of
economic integration.
There are certain countries and participants which are member states and who are not in
favour of using single currency which make them only reach to the completion of partial

requirements of the Balassa's system in regards to economic integration. This showcases the
differentiation as some countries have opted out from the policy on their own and the others who
have not met the convergence criteria. Although, at present the euro participants have increased
since the early period and the table showcase it below:
Year EU Members Participants
1999 7 5
2020 27 19
In regard of this, by undertaking the integration with European Union, it is being
identified that the enhance participation of members in the states undertaking the policy and after
that the empirical evidence represent the illustrating and suitable participation within the
monetary unions that has been increased over time by indicating the integrative process which
declined. Furthermore, it is being evaluated that the integration and differentiation both are
inverse of each other and the decline of integration leads to confirm the enhancement of
differentiation.
Despite from this, in order to understand the distinct separation among the states which they
want to join the and also need to acknowledge the political nature of the national currencies by
analysing and keeping in view the monetary policy. It tends to undertake the analysis of
politicization by effectively opting things for the international currency that entail the sacrifice of
the suitable amount of sovereignty that plays an important role regarding the decision making of
state which is being opted out by them and it is mostly done in the UK and Denmark when they
are suitably agreed with the exemption of EMU. Along with this, citizen also tends to confirm
that they effectively care that who governs about the authority over them by highlighting the
decision making as per the political nature and interest which is cared about public. Moreover,
people also suggest that regarding the several facts of European facts that they did give up on the
suitable elements of national sovereignty in order to agree to join the Euro from the execution of
substantial things. Furthermore, the whilst it depicts the suitable leap which is being forwarded
within the integrative process, which does not get prohibited by the system that adapt over time
which is being understood as one of differentiated integration.

Along with this, the national currencies are also politicized the economic policy by having
effective identity of the country and Eurosceptic values that plays an important role regarding the
decision making towards state undertaking the unified currency or not. It is also being
exemplified in Sweden where the electorate narrowly voted to does not opt the Euro despite
being the member of EU without a formal opt out agreement. Along with this, Sweden highlight
the effective level of differentiation that exist in the EMU policy and also undertake the
difference among suitable states which is being opt in and out of the prominent policy but there
is no divergence in the prominent manner that by undertaking the way which highlight the added
level of extent differentiation which is being occurred.
Furthermore, the prominent policy also suggests things by the effective interdependence
which is quite internally different and for this, EMU suggest the case of high interdependency as
the various countries also tied up with their nominal exchange rates and other elements of
national monetary policy towards the Euro. It undertakes the call for European Commission for
the global presence of Euro through the enhance globalisation of economics which is being
evident of single currency that depict the interdependent policy problems. Therefore, the EMU is
high internal differentiation policy because of the presence of both the high interdependence and
politicization with the area of policy.
Furthermore, the about information is important in order to acknowledge the various types
of differentiation by characterising the EU’s differentiated integration which is horizontal and
vertical. In above part the integration has being decreased proportionately which is being
decreased in the last twenty years on the existence of EMU by undertaking the participating
member states that leads to decrease the 3.5 percent. It also tends to confirm the horizontal
differentiation which has being increased as the scale of European Union to have the divergences
and several differences among the members after participating in Euro. In regard of the
horizontal differentiation which is being characterized by the fact that several integrated policies
are neither valid nor uniform in EU’s state member. \
Along with this, the economic policy is plays an important role in terms of the participating
countries for the effective execution of currency works. For this, when the formal exemption is
done then Euro has not been arranged undertake the several countries like Bulgaria and Romania
in order to meet the suitable convergence criteria after they leads to opt the single currency. By
effectively combining the centralised monetary governance highlight the single currency which

is the vertical integrated policy as the single currency undertake the policy of higher level
considering the depth that has being attached to it. Moreover, EMU is not vertically different as
the overall assessment of policy undertake the effective politicized, interdependent and internal
differentiation that lack towards the vertical differentiation which is irrelevant. As it is the
overall horizontal differentiation the undertake the suitable policy regarding the differentiated
integration.
Furthermore, the EMU is the suitable concept of policy area which is being characterised
by the politicization and interdependence that leads to being defined as the internally
differentiated. Moreover, it leads to made things clear by the stages of economic integration as
there is differentiation in the integration process of EMU undertaking the suitable states in terms
of reaching the fourth level of economic integration criteria to reach towards the others and third
one. Hence, it is quite difficult is to disagree with the suitable statement that differentiated
integration is not institutional reality in the European Union. So, it is quite clear that the system
of differentiate integration is inherent regarding the decision of UK and Denmark in order to opt
things to remain same. Therefore, these things are permanent divergences in the segment of
monetary policy in European policy. Therefore, it does not mean that the system of European
Union integration which is flawed instead of simply call for the better understanding for having
integrated system which is classified by the different nature. Hence, these debates started to
intrude into the EU study and also been played out extensively broader international relations
literature.

Online
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<http://userpage.fu-berlin.de/kfgeu/maxcap/system/files/maxcap_wp_21.pdf/>
European Integration (Theory) in Times of Crisis, 2021 [Online] Available Through:
<https://www.eui.eu/Documents/RSCAS/JMF-25-Presentation/Schimmelfennig-
European-Integration-in-Crisis-RSC.pdf/>