The European Union is the most highly evolved international organization. It is the product of more than 40 years of effort to integrate the countries of Europe economically and politically. Beginning with six members in 1954 and restricted to the coal and steel sectors of the economy, the EU now encompasses 15 members, all major aspects of economic policy as well as many related policy areas. Including yet more members is foreseen. At the heart of the EU is a customs union—and now a single market—with a common external tariff. It is a supranational organization, widely interpreted as providing for the shared exercise of its member states' sovereignty.

The EU can legislate in the sense that it can adopt binding legal instruments through the action of its institutions alone. For this purpose it has a complex institutional structure, involving legislative, executive, judicial and advisory organs. Most important among these are the Council—the ultimate legislative authority made up of representatives of the member states, the directly elected European Parliament which shares legislative responsibility, the Commission as executive organ, and the European Court of Justice.

The EU has two principal legislative instruments, the Regulation and the Directive. Regulations are directly applicable and are used for technical aspects of issues where the EU has exclusive competence—for example, trade or adjusting agricultural prices. Directives are the instrument of choice for most environmental issues since they determine the objectives to be achieved but leave member states free to choose the means of implementing them. In practice, directives can be technically quite detailed in those areas where upward harmonization is sought.

As the EU expanded its legislative reach internally it has also acquired the external responsibility for the areas subject to European legislation. As a result, the EU and its member states engage in a complex internal negotiating process before any international negotiations. In principle this process takes place in the Council, but a specialized body prepares Council decisions on trade: the Article 133 Committee. In international negotiations often the boundary shifts between those areas that fall into the responsibility of member states, those that are the exclusive domain of the EU, or those that are shared between them.

Within the WTO, the EU speaks with a single voice on all commercial policy matters. Because GATT originated as an administrative agreement rather than a formal international treaty, representation of the EU in the WTO falls to the executive organ of the EU, the Commission. As a result, individual member states of the EU have a limited role in the WTO but the EU as a whole is one of the two most important actors in the organization. No decisions can be taken without it.

The EU has developed extensive environmental legislation. As the shape of markets changes, essential market disciplines, including environmental requirements, must be adjusted to reflect the structure of integrated European markets. EU environmental legislation has more than 300 items, covering every aspect of environmental policy. Directives cover emission standards and quality objectives for water; managing hazardous and domestic waste; packaging; atmospheric emissions from plants and vehicles; air quality standards and the stratospheric ozone layer; all aspects of toxic substances control; nature protection, migratory birds, endangered species; wildlife; noise; and climate change. Furthermore, EU legislation addresses impact assessment, freedom of information, ecolabelling, eco-management and auditing, and has established financial and economic instruments for environmental management. The EU's Common Agricultural Policy provides substantial sums of money for protection of nature in rural areas.

Environmental management is a responsibility shared between the EU and member states, whereas trade lies exclusively with the EU. This asymmetry has rendered the balancing of environment and trade interests more difficult since the functions of key actors are different in the two areas of policy.

7.3 Mercosur