UK: The European Union – An Overview
Part 1 of 2

The European Union (the EU) is the name now commonly given to the formal association of 25 European countries, or Member States, and is used to describe the geographical area covered by those countries as well as the abstract concept of the association. The establishment and operation of the EU is based on inter-governmental treaties by means of which the Member States have granted certain powers and functions to centralised EU institutions of which the most important are the European Commission, the Council, the European Parliament and the two supranational Courts. The distribution of power both between EU institutions and Member State governments and amongst the institutions themselves is still shifting and is the subject of continuing debate.

The European Commission is the central administrative and policy-making body of the EU. It is made up of 25 Commissioners (nominated by the Member States and approved by the European Parliament), one of whom acts as President. The Commission formulates legislative proposals, implements Council decisions, negotiates many international agreements on behalf of the EU and supervises compliance with, and implementation of, EU law by the Member States.

The Council is the EU’s principal decision-making body. At the top level it comprises government ministers of all the Member States with responsibility for a particular sector, e.g. transport ministers will convene to discuss proposed legislation on transport. The details of legislation are usually worked out at lower levels by more junior representatives of the Member States, the most important of these being the Committee of Permanent Representatives ("COREPER"). The European Council, a twice-yearly meeting of the heads of state of the Member States, decides on, and reviews, the overall policy of the EU.

The European Parliament is a democratically elected body with members ("MEPs") elected directly from each of the Member States and grouped according to political rather than national affiliation. The number of MEPs from each Member State is roughly proportionate to the Member State’s population. It shares with the Council the power to legislate and it exercises democratic supervision over the Commission.

Other EU bodies such as the Economic and Social Committee and the Committee of the Regions may also play an advisory role in the legislative process.

The Commission initiates most EU legislation. Its proposals are then considered by the Council and the Parliament and follow one of a number of procedures as dictated by the Treaties. The co-decision procedure is most commonly used (see page 13). Legislation in the form of Regulations is directly applicable in all Member States, whilst Directives have to be implemented into national law by the law-making bodies of each Member State. The EU can only legislate in areas in which there is specific authority to do so in one of the Treaties. The Treaties and, in certain circumstances, some secondary legislation, take precedence over any inconsistent national law.

25 Member States

A Brief History of the European Union
The Treaty of Rome, which became operative on 1 January 1958, established the European Economic Community (the "EEC") between the original six Member States – Belgium, France, Germany, Italy, Luxembourg and the Netherlands. The EEC – subsequently known as the European Community (the "EC") – built upon a number of principles and institutions developed within the European Coal and Steel Community (the "ECSC") which was created in 1952 by the ECSC Treaty (also known as the Treaty of Paris). The scope of the ECSC was limited to developing a common strategy for coal and steel. Similarly, the European Atomic Energy Community ("EURATOM"), established by the EURATOM Treaty in 1958, was limited to achieving a common policy for nuclear energy. The EEC, in contrast, covered a whole range of economic activity which has been progressively increased by subsequent amending Treaties to such an extent that it is unlikely that any business could exist today in Europe without having at least some part of its operations influenced by laws deriving from the Treaty of Rome.

In 1986, the Single European Act ("SEA") was signed, entering into force on 1 July 1987. This Treaty made significant procedural amendments, particularly in the area of law-making where it increased the influence of the Parliament and the use of qualified majority voting in the Council at the expense of unanimity for proposed legislation. This made possible a relatively rapid creation of the internal market.

The Treaty on European Union, more commonly known as the Maastricht Treaty, built on the foundations of previous Treaties to extend the area of European competence still further. The Maastricht Treaty, which came into force on 1 November 1993, created the "European Union". This is often described as a three pillar structure. The first pillar is constituted by the existing Communities (the ECSC, EURATOM and the EC), albeit with new institutions and powers (or competencies) added to those provided for in the Treaty of Rome. The EEC Treaty, by which name the Treaty of Rome was also known, was renamed the "EC" Treaty to emphasise its broader scope. The Maastricht Treaty identified the goal of Economic and Monetary Union but also gave the EU new competencies (or a more active role) in areas such as consumer protection, trans-European networks, public health, development co-operation, visa policy, industrial policy, education and culture. The other two pillars of the European Union deal with the Common Foreign and Security Policy and increased co-operation in Justice and Home Affairs. These are not dealt with in detail in this publication, as they are less likely to have a direct impact on businesses than the essentially "economic" pillar.

The functioning of the European Union, as established by the Maastricht Treaty, was reviewed by an Intergovernmental Conference ("IGC"), which culminated in the signing of the Amsterdam Treaty in October 1997. The Amsterdam Treaty, which came into force on 1 May 1999, failed, however, to make institutional reforms necessary for further enlargement. Another IGC on institutional reform was held in 2000. Agreement was reached in December 2000 on the draft of a new treaty, known as the Treaty of Nice, which amended the Treaty on European Union, the Treaties establishing the European Communities and the Protocol on Enlargement of the European Union.

A new draft Constitutional Treaty for Europe ("the Constitutional Treaty") was adopted by the European Council in June 2004. It was signed by the heads of state and of government of the 25 Member States in Rome on 29 October 2004. The Constitutional Treaty needs to be ratified by all Member States according to their respective constitutional provisions (i.e. parliamentary approval and/or referendum) before it can take effect. This process is not expected to be complete until at least the middle of 2006. Once the Constitutional Treaty is in force, it will repeal the EC Treaty and the EU Treaty and any Acts or Treaties which have supplemented or amended them, including the Single European Act, the Treaty of Amsterdam and the Treaty of Nice.

The European Union has undergone a process of steady enlargement, beginning with the entry of the UK, Ireland and Denmark on 1 January 1973, Greece on 1 January 1981 and Spain and Portugal on 1 January 1986. Austria, Sweden and Finland became members of the EU on 1 January 1995. On 1 May 2004, the EU was enlarged to include Cyprus, Estonia, Hungary, Poland, the Czech Republic, Slovenia, Latvia, Lithuania, Malta and Slovakia. Bulgaria and Romania are expected to join in 2007. On 16 December 2004, EU heads of state and government agreed to open accession negotiations with Turkey. Negotiations will start on 3 October 2005, with no guaranteed outcome, although the ultimate goal is EU membership. If negotiations fail, Turkey will be "anchored in European structures". One of the conditions of entry will be recognition of Cyprus as a sovereign state. The Council has also decided to begin negotiations with Croatia in 2005.

As explained above, the European Union was brought into existence by a series of multilateral Treaties between sovereign states, signed and ratified in accordance with their customary constitutional procedures. These Treaties, as amended, are the source of constitutional law of the EU. They set out the objectives of the EU, create its institutions and regulate its functioning. The extent to which the institutions can make laws directly affecting business and people in the Member States within the EU’s defined objectives and competencies gives the European Union a very different and much more powerful character than other international organisations.

The EU’s objectives and competencies are set out in the preambles and sections of the various Treaties. Its fundamental task is to establish a common market, Economic and Monetary Union and "an ever closer union among the peoples of Europe". The common market is to be achieved by the realisation of four "freedoms": free movement of goods, persons, services and capital. In addition to this the Member States of the EU are to develop common economic policies in the areas of fair competition, the environment, consumer protection, research and development, transport, energy, agriculture and external trade. To this, the Maastricht Treaty added the political goals of a Common Foreign and Security Policy together with co-operation in the fields of Justice and Home Affairs. The Amsterdam Treaty added an employment chapter and provides for the gradual introduction of common rules on immigration, asylum and visa policy.

The main institutions of the European Union are the European Commission, the Council, the European Parliament and the Courts of Justice. Their powers and duties derive from the Treaties. This chapter describes how each of the institutions is structured and briefly outlines their functions. Some other European Union bodies are also covered.

The European Commission is the executive and administrative organ of the EU and of central importance to its functioning. It is located in various buildings in Brussels; a small number of its services are based in Luxembourg. All Commissioners have their office in the Bergamot building.

Structure
The Commission comprises 25 members ("Commissioners"). The administrative functions of the Commission are carried out by 36 Directorates-General ("DGs") and other services such as the Legal Service and Secretariat-General; the latter essentially acts as the interface between the 25 Commissioners and the Directorates-General and between the Commission and the other EU institutions (see Annex A).

The Commissioners are drawn from the Member States of the EU – one from each of the Member States (see Annex B). The Treaty of Nice provides that when the EU comprises 27 Member States, the number of Commissioners will be capped and a rotation system based on the principle of equality will be introduced under arrangements adopted unanimously by the Council.

Commissioners are required to act independently of their national governments and in the sole interests of the EU, but need not renounce their party political allegiances. In practice, they have a natural affinity with their own Member State, if only for linguistic reasons. This is worth bearing in mind in any approach to the Commission. Many Commissioners have a background in national politics while others have experience as senior administrators, trade union leaders or businessmen.

The Treaty of Nice changed the procedure for nominating the Commission. The nomination of the President is a matter for the European Council acting by qualified majority. The chosen candidate is then subject to approval by the European Parliament. Thereafter, the Council, acting by qualified majority and in agreement with the appointed President, will adopt the entire list of the other persons it intends to appoint as members of the Commission.

The President decides on the allocation of portfolios and may reassign responsibilities in the course of the Commission’s term of office. The President is also entitled to demand a Commissioner’s resignation, subject to the Commission’s approval.

Approval of the Commission
The Parliament must approve the appointment of a new Commission and its President and has the ultimate power of dismissing the whole Commission (but not part of it). Under the Amsterdam Treaty the proposed Commissioners are presented to the Parliament, which votes on each nomination.

The Commission, including its President and five Vice- Presidents, are appointed for a term of five years. The current President is Jose Manuel Barroso, former Prime Minister of Portugal.

Each Commissioner has a cabinet (private office) to assist him or her. The cabinets comprise internal Commission staff, members of national administrations and others brought in by the Commissioner. Cabinet members work for the Commissioner personally and are seen as the Commissioner’s representatives, each specialising in particular issues. Each cabinet is headed by a Chef de Cabinet (Chief of Staff) who may deputise for the Commissioner at Commission meetings.

The Commission functions as a collegiate body in the sense that it bears collective responsibility for its acts. It functions by means of a majority vote and normally meets each Wednesday.

Functions
The Commission has four main functions: (i) initiation and preparation of legislation; (ii) implementation; (iii) supervision; and (iv) international representation of the European Union.

(i) Initiation and preparation of legislation
In most cases, the Commission has the sole right to initiate legislation within the Treaties. In this sense, it is the catalyst of the European Union. It may act on the basis of submissions by other EU institutions or by interest groups and individuals or on its own initiative. In the case of political co-operation in the Common Foreign and Security Policy and in Justice and Home Affairs, the Commission shares its right of initiative with the Member States.

Once the Commission has decided to make a proposal in a particular area it will normally consult widely with interested parties before drafting and adopting its final proposal. These consultations may take place at the political, Member State, civil service and trade union levels and may involve industry, consumers and political elements. As the Commission is relatively small and may lack detailed technical knowledge, particularly in relation to the domestic market in each Member State, it is often reliant on external expert evidence and consequently wants and needs contact with outside interest groups. Generally, therefore, the Commission is open to receiving the views of any party potentially affected by a proposal.

Within the Commission, the proposal will be discussed by the Commissioners and their cabinets; the specialist Directorates concerned, and by the Legal Service.

Consultation with Member States typically takes place at meetings with national civil servants who will be able to advise the Commission on the acceptability of its proposal. Consultations with other interested parties such as industry may be carried out on a formal basis (e.g. via Green and White Papers and public hearings/fora) or informally, with those interested in putting their views to the Commission by means of written or oral submissions.

(ii) Implementation
As the executive of the EU, the Commission is responsible for:

• the implementation of decisions taken by the Council;

• the implementation and administration of EU policies delegated to it by the Council such as competition policy, external trade policy, the common agricultural policy and coal and steel. In these areas it has substantial autonomous powers;

• administering the various funds established by the Treaties, e.g. the social, structural and regional funds;

• negotiating certain international agreements on behalf of the EU; and

• preparing a draft budget for the EU to be approved by the Council and Parliament.

The Commission’s decisions in these areas can have a substantial impact on business.

(iii) Supervision
The Commission has been given the role of "guardian of the Treaties". As such it:

• has a general responsibility to ensure the Treaties’ provisions are properly carried out;

• supervises the implementation of EU law by Member States; and

• where necessary, it must consider taking steps to remedy any breaches of EU law it identifies, ultimately, if necessary, by bringing an action against the offending Member State in the Court of Justice of the European Communities (commonly known as the "ECJ"). The Commission can also, since the entry into force of the Maastricht Treaty, bring a further case against a Member State that fails to comply with a judgment of the ECJ and may suggest the amount of a suitable fine to be imposed.

(iv) International representation
The Commission also represents the European Community and conducts international negotiations (for example in the World Trade Organisation).

The Council of the European Union is the most powerful of the EU institutions. It is the centre of political control and the primary decision-making body of the EU. The Presidency of the Council rotates every six months between the Member States. Meetings of the Council mainly take place in Brussels, although in April, June and October Ministers meet in Luxembourg. The European Council, which represents the highest and a special form of the Council, meets at least twice a year in Brussels.

Voting is mostly by qualified majority although some decisions require unanimity. In the case of the former, each Member State has a number of votes, weighted to reflect the fact that the Member States are equal as members of the Union but different in terms of population.

Structure
The Council consists of Member States’ representatives who are empowered to commit their government. It takes various forms. These are set out below in order of seniority.

(i) The European Council ("Summit")
This consists of the heads of state or of government, accompanied by the foreign ministers, and the Commission President (who, unlike the Commission representative in the Council of Ministers, is treated as a full member and entitled to vote). It meets twice a year, normally in June and in December, for two days (normally Friday and Saturday) to decide the most important issues of EU policy and strategic direction. The Maastricht Treaty also gave it certain operational responsibilities in relation to foreign and security policy and Economic and Monetary Union.

(ii) The Council of Ministers
The composition of the Council of Ministers varies depending on the subject under discussion. The General Affairs Council (composed of the foreign ministers of all the Member States) will discuss a variety of topics and generally co-ordinate the work of other ministerial councils. Sectoral Councils such as the Agriculture, Transport, Energy or Environment deal with these topics and are made up of the relevant national Ministers (e.g. all 25 Ministers of Agriculture attend the Agriculture Council meeting; all 25 Transport Ministers attend the Transport Council meeting and so on). A Commission representative will also attend, though not as a full member.

The frequency of sectoral Council meetings depends on the subject area. The General Affairs, Economic and Financial Affairs and Agriculture Councils meet once a month, while the Transport, Environment and Industry Councils meet two to four times a year.

(iii) COREPER (Committee of Permanent Representatives)
The COREPER meets weekly in two different formations, COREPER II, consisting of Members States’ Permanent Representatives (i.e. Ambassadors to the EU) and COREPER I, consisting of Deputy Permanent Representatives.

A large number of decisions are taken here. Many legislative proposals are adopted subject only to formal endorsement by the Council of Ministers.

(iv) Working Groups
These consist of representatives from the Permanent Representations to the EU (i.e. a branch of the Home Civil Service based in Brussels) and officials from the national government departments. There are many different sectoral working groups which meet as necessary. They consider proposals in detail and prepare them for discussion by the COREPER and Council of Ministers. No formal minutes are taken of these meetings although national officials may take their own notes.

The European Parliament is the only directly elected institution of the European Union and, as such, adds an element of democratic control and accountability. Its powers were narrowly restricted in the past but it has steadily acquired greater influence and power through a series of treaties. The next European elections are due in June 2009.

Site
The Parliament normally holds monthly plenary sessions in Strasbourg, but most committee meetings take place in Brussels. The bulk of its Secretariat is based in Luxembourg. Some plenary sessions (known as minisessions) take place in Brussels.

Function
The role of the European Parliament is not strictly comparable to that of the Member States’ parliaments although there are similarities. The Parliament’s functions can be categorised as legislative, budgetary and supervisory.

(i) Legislative Functions
The role of the European Parliament in the legislative process varies according to the procedure to be followed. Successive Treaties have increased its powers (see further the chapter on Legislative Procedure).

(ii) Budgetary Functions
The Parliament has acquired an important role in the budgetary procedure and exercises a measure of real power. It can reject the Commission’s draft budget completely and can propose modifications to "compulsory expenditure" (i.e. expenditure under the Common Agricultural Policy) and amendments to "non-compulsory expenditure" (spending relating to other policies). In relation to the latter amendments, it can override the Council’s position. The Parliament decides on the final adoption (or rejection) of the budget and also approves (or otherwise) the Commission’s implementation of the budget.

(iii) Supervisory Functions/Institutional Control
The Ombudsman
The Maastricht Treaty provided for the appointment of a Parliamentary Ombudsman. Citizens of the Union or legal entities with registered offices in a Member State may complain to the Ombudsman about instances of mal-administration in the activities of EU institutions or bodies. The Ombudsman can also decide to conduct inquiries on his own initiative. The Ombudsman has no power to impose legal sanctions for mal-administration.

His most effective weapon is therefore likely to be the threat of bad publicity for the relevant EU institution. Under the Treaty, the Ombudsman is appointed by the Parliament for a period of five years.

Committees of inquiry and of petition
The Maastricht Treaty also gave Parliament the power to set up temporary committees of inquiry to investigate contraventions of, or mal-administration in, the implementation of EU law. Detailed provisions of the right of inquiry have been adopted by common accord of the Parliament, Commission and Council.

The right of inquiry means that anyone resident in the European Union may petition Parliament on matters where the European Union has competence.

Written and oral questions
Written and oral questions provide Members of the European Parliament ("MEPs") with an opportunity to obtain information from the Commission and Council, or to highlight issues which they consider important or relevant. Detailed information can be obtained through written questions, although they usually take months to be answered. A more rapid response can be obtained at the monthly question time.

Structure
The Treaty of Nice limits the total number of seats in the European Parliament to 732. MEPs are directly elected in the Member States every five years. The number of MEPs from a Member State depends roughly on the population of that Member State. Germany, as the most populous country of the EU, is entitled to 99 seats, the UK 78 and Malta only 6. MEPs sit in political rather than national groupings. Following the most recent elections in June 2004, the largest of these groups is the European People’s Party (centre right) with 268 seats. The Parliament includes political groups as well as nonattached or independent MEPs.

The Parliament meets once a month (except in August) for a plenary session lasting for one week in Strasbourg. Some shorter plenary sessions take place in Brussels where there are also monthly committee meetings usually lasting two to three days as well as meetings of the political groups.

Committees
Twenty standing committees carry out much of the work of the Parliament, each covering a different area (see Annex C). In addition, the Parliament sets up temporary committees, sub-committees and committees of inquiry to examine specific problems. There are 34 interparliamentary delegations dealing with relations with other parliaments and international institutions around the world. The main work of the committees is the detailed examination of legislation involving the drawing up of reports and opinions on proposals for legislation. A rapporteur (lead MEP) chosen from amongst the committee members drafts a report which is presented to the full committee and, if adopted, submitted to the plenary session to be voted on together with an accompanying resolution which constitutes the Parliament’s Opinion on the particular proposed legislation. More than one committee will typically consider a proposal, but the primary responsibility for formulating the Parliament’s Opinion will be given to a single "committee au fond" (lead committee).

The Bureau
The Bureau is a regulatory body consisting of the Parliament’s President, fourteen Vice-Presidents and five Quaestors and has responsibility for Parliament’s budget and for administrative, organisational and staff matters. The President of the Parliament is elected by the MEPs and either s/he or one of the Vice-Presidents preside over plenary sessions of the Parliament. The Conference of Presidents (the President together with the Chairmen of the political groups) has considerable political influence and is responsible for all legislative planning and relations with other institutions. Administrative support for the Bureau consists of a Secretariat and seven Directorates-General. Officers drawn from these may attend the twice-monthly meetings of the Bureau and the Conference of Presidents.

The Secretariat
The Parliament’s work is organised by the Secretariat, headed by a Secretary-General with a permanent staff of about 3,500. The Secretariat’s staff comprises permanent officials of the European Union who provide support to the President of the Parliament, the Bureau and the committees. It is based in Luxembourg but also has offices in Brussels.

There are two EU courts responsible for the interpretation of Community law. The Court of Justice of the European Communities (commonly known as the "ECJ") is the highest authority, and is assisted by the Court of First Instance or "CFI". These courts should not be confused with the European Court of Human Rights in Strasbourg or the International Court of Justice in the Hague which are not European Union bodies. The ECJ and the CFI share the same location in Luxembourg.

Function
The cases heard by the ECJ consist of references from national courts for preliminary rulings on EU law, actions by and against Member States and appeals from the CFI on points of law.

Structure
The ECJ consists of 25 Judges and eight Advocates- General appointed by agreement between the Member States for a renewable term of six years. The Court includes one judge from each Member State, so that all the EU’s national legal systems are represented. However, for the sake of efficiency it sits as a "Grand Chamber" of just 13 judges, instead of always having to meet in a plenary session attended by all the judges. Each Judge and Advocate-General has his or her own "Cabinet" of assistants.

The administration of the ECJ is the responsibility of the President of the Court, a Judge appointed by the other Judges for a renewable term of three years. The President directs the work of the Court, presides at hearings of the full Court and at deliberations in the Deliberation Room and has the power to order interim measures in urgent cases. The President also assigns new cases and designates a Judge-Rapporteur for each case; this judge is responsible for the progress of the case through the Court.

The ECJ may sit in plenary session (when a Member State or Community institution that is a party to the proceedings so requests, or in particularly complex or important cases) but otherwise sits in Chambers made up of three or five Judges. The Chambers may undertake certain preparatory inquiries or give rulings in certain instances.

The role of the Advocate-General is to produce an impartial and reasoned opinion citing relevant case law in each case brought before the ECJ. This opinion is often the basis on which the Court reaches its judgment but is not binding on the Court.

Procedure
Court procedure is governed jointly by the Treaties, the Statutes (the ECSC, EC and EURATOM Statutes) and by the ECJ’s own Rules of Procedure. The procedure consists of two parts: written and oral. The Court may also order a preparatory inquiry or other measures of inquiry.

Function
The CFI was set up to reduce the caseload of the ECJ and now deals with a wide variety of cases that are generally less politically sensitive. The Treaty of Nice significantly increased the responsibilities of the CFI. It is independent of the ECJ in its judicial functions but uses the same administrative departments in Luxembourg.

The CFI is the court responsible for hearing almost all actions brought by private parties against Community institutions. It deals in particular with appeals on agriculture, State aid, competition and dumping cases. It also deals with cases arising from the EU Trademark Registry.

Structure
There are 25 Judges appointed by agreement between the governments of the Member States for a renewable term of six years. The President is elected by the other Judges for a three-year period. There are no permanent Advocates-General but Judges may be called upon to perform that role in a limited number of cases.

The Court sits in Chambers of three or five Judges but may also sit in plenary session in certain particularly important cases.

Procedure
The CFI is governed by the Treaties, the Decisions establishing it, part of the Court of Justice Statutes and Rules of Procedure. Its procedure is broadly similar to that of the ECJ.

The Economic and Social Committee
Commonly known as ECOSOC (although its official acronym is the "ESC") the Economic and Social Committee is a non-political, advisory body composed of representatives of various economic and social interest groups throughout the Member States. It is a body that gives the EU’s economic and social partners (i.e. its employers, representatives of small businesses and consumers, to name a few) the chance to issue their formal opinion on EU policies and draft legislation.

The opinion of the ECOSOC is valued and carries some weight with the Commission, particularly on more technical issues and subjects where it is recognised that the Committee Members have experience. It is based in Brussels.

The Committee of the Regions
The Committee of the Regions ("COR") was set up by the Maastricht Treaty with the intention of introducing a greater measure of devolved power and increasing visible subsidiarity. It is a political assembly which provides local and regional authorities with a representative in Brussels.

The Court of Auditors
The European Court of Auditors is responsible for overseeing the finances of the EU and the bodies set up by it, with the exception of the European Investment Bank. It sits in Luxembourg.

The European Investment Bank
The European Investment Bank (EIB) was set up in order to provide finance (by way of loans) to projects which it considers will further the development of the European Union. It is based in Luxembourg.

The European Central Bank
The European Central Bank (ECB), based in Frankfurt, was established in June 1998 to replace the European Monetary Institute. The legal basis for the ECB is the Treaty establishing the European Community.

The ECB is in charge of the single currency, the euro, and has the exclusive right to authorise the issue of banknotes within the Member States participating in monetary union. The ECB independently manages European monetary policy and decides how high interest rates should be. It is also empowered to make regulations, take decisions and deliver recommendations and opinions.

The ECB, together with the national central banks of the EU’s Member States, make up the European System of Central Banks. The primary objective of the European System of Central Banks is to maintain price stability so that the European economy will not be damaged by inflation. Its tasks are to conduct foreign exchange operations, to hold and manage the official foreign reserves of the Member States, to define and implement the monetary policy of the EU and to promote the smooth operation of payment systems. Every three months the ECB reports on the activities of the European System of Central Banks. As at 1 January 2005, the following 12 Member States were included in the euro zone: Austria; Belgium; Finland; France; Germany; Greece; Ireland; Italy; Luxembourg; the Netherlands; Portugal and Spain.