The European Union (EU) is a political and economic community of twenty-seven member states, located primarily in Europe. It was established in 1993 by the Maastricht Treaty, adding new areas of policy to the existing European Community. With almost 500 million citizens, the EU combined generates an estimated 30% share of the world's nominal gross domestic product (US$16.8 trillion in 2007).
The EU has developed a single market through a standardised system of laws which apply in all member states, guaranteeing the freedom of movement of people, goods, services and capital. It maintains a common trade policy, agricultural and fisheries policies, and a regional development policy. Fifteen member states have adopted a common currency, the euro. It has developed a role in foreign policy, representing its members in the World Trade Organization, at G8 summits and at the United Nations. Twenty-one EU countries are members of NATO. It has developed a role in justice and home affairs, including the abolition of passport control between many member states under the Schengen Agreement.
EU operation is a hybrid of intergovernmentalism and supranationalism. In certain areas it depends upon agreement between the member states. However, it also has supranational bodies, able to make decisions without the agreement of members. Important institutions and bodies of the EU include the European Commission, the European Parliament, the Council of the European Union, the European Council, the European Court of Justice and the European Central Bank. EU citizens elect the Parliament every five years.
Although the Treaties are the ultimate source of EU Law, there are a number of legislative instruments available to the EU institutions. The three main instruments are Regulations, Directives and Decisions. There is no formal hierarchy regarding the three types.
Regulations are legislative acts which become law in all member states the moment they come into force, without the requirement for any implementing measures to have been taken by member states. Once in force their contents automatically override conflicting domestic provisions, as a result of having direct effect in the national law of the member states.
Directives require member states to achieve a certain result while leaving them discretion as to how to achieve the result within a certain time period. Directives are generally used where it is thought preferable to leave the precise details of legislative implementation to national governments. Once the stated time period has passed, under certain conditions provisions within a Directive may have direct effect in national law against Member States.
The ECJ in Luxembourg can judge member states over EU law.
Decisions offer an alternative to the two above modes of legislation. The Council and the Commission may publish in the official journal a decision, notified to a particular addressee, such as an individual trader or a company. Decisions will be found most commonly in Competition Law, or on rulings on State Aid, and can be challenged by the addressee under certain circumstances before the EU courts.