The creation of a common agricultural policy was proposed in 1960 by the European commission. The six member countries wanted to intervene in agriculture to control how agriculture was organised and guarantee prices for goods. They wanted to increase productivity, ensure a fair standard of living for those within the European Union, stabilise markets and provide a secure availability of supplies, while providing the consumer with reasonable prices for agricultural products. The CAP is a system that maintains the prices of products by using subsides to support production. Subsides have helped to make EU countries self sufficient in food.
In the European Union governments retain the sole right to maintain and set levels of direct taxes. These are the taxes they set for incomes and company profits. Instead EU taxation policy focuses upon indirect taxes. Indirect taxes include value added tax and excise duties. It is argued that where VAT or excise duties are put on petrol, drinks and cigarettes, they have the capability to distort competition in what should be a free market. Some of the EU budget is funded from VAT. By having a common approach to this, it means that contributions to the EU are fairly distributed across all markets.
Marks & Spencer is an example of a company that trades both in the domestic and European markets. The company owns and operates nearly 100 additional Marks & Spencer stores in Europe, Hong Kong, and Canada as well as franchise outlets for its products. It has been able to expand thanks to European business initiatives abroad and has made many profits there. However this expansion has not been without its problems for Marks and Spencer.
For example when Marks and Spencer was forced to close its French stores to save money, it was not without its critics in Europe. It was argued that Marks and Spencer did not consult with its French work force before closing its French outlets. The consequence of this was that workers were left feeling unprepared for their redundancies. This situation resulted in the decision by the EU to discuss new directives for information and consultation of workers when companies engage in industrial restructuring.
Marks and Spencer was also involved in a tax dispute with EU states. Marks & Spencer, the Britain's largest clothing retailer, sought a rebate of more than 30 million pounds, arguing that it should have been allowed to deduct losses made at its Belgian, French and German units.
Marks & Spencer expanded from its UK market and established subsidiaries in Belgium, France, Germany and Spain. In the late 1990s, these units incurred increasingly heavy losses according to court documents. In early 2001, the retailer decided to close the businesses. The company sought to offset losses between 1998 and 2001 through group tax relief under UK law. The rule allows a member of a group of UK companies to transfer a loss to another member, a process known as tax consolidation.
The request was refused. British authorities said group relief can only be claimed for losses in the UK Marks & Spencer appealed, arguing the legislation harms companies that have subsidiaries outside the country, a violation of EU law. The UK High Court referred the case to the EU tribunal. Marks & Spencer eventually won the crucial European court judgement which could rewrite UK company tax law and cost the Treasury billions.
Judges in Luxembourg said the Inland Revenue's refusal to allow companies to offset their losses in another EU country against their UK profits violated European Union rules The verdict has saved Marks & Spencer an estimated ï¿½30 million whilst at the same time giving the treasury future problems when dealing with companies in the same positions as Marks and Spencer found itself. Marks and Spencer prides itself on being an ethical company and it has shown this side of itself on a number of occasions.
Recently Marks and Spencer joined forces with other high street companies to campaign against the EU from bringing back cosmetics tests on animals in a new law on chemicals. The coalition have signed up to a joint declaration as it launches a nation wide advertising campaign to urge Britons to fight for their right to keep cosmetics cruelty free.
Millions of animals could be made to suffer painful and inefficient tests if new EU legislation to regulate chemicals – known as the Regulation, Evaluation and Authorisation of Chemicals. The UK stopped licensing cosmetic animal tests in 1998 due to broad public opposition but this new legislation could mean that companies will be forced to test cosmetics on animals regardless of what they or their customers want. Marks and Spencer has also been warned by Europe's Trade Commissioner Peter Mandelson about the illegal dumping of goods on European markets.