This is a forward to this annual volume, which celebrates EUSA Japan’s forty years’ anniversary. The paper first contrasts the economic, political and institutional contexts of the European Communities in the 1980s with those of the European Union in the 2020s. Radical changes have happened during the forty years. The Cold War is gone, European single market is realised with a single currency Euro, the European Parliament is now a co-legislator alongside with the Council for most of the European matters, EU-Japan relations have improved from conflict to partnership. The paper then argues that these changes have generated some new challenges to pursue further integration at the European level. Those include the need to develop a better way of enhancing democratic legitimacy in EU governance; the need of more sensitive balancing of interests by the Court of Justice, such as the European interest to further integration and the national interest to maintain national identities of the member states; the need of addressing to social side-effects of market integration （widening income gap between EU citizens and between the member states）; the enhanced role of the EU in making global rules and standards. The paper concludes that it is possible that new modus operandi may emerge even under the same old EU structure to address to those challenges, since the formal amendment procedure of the basic treaties is now quite unwieldy among twenty-seven member states.

　In the last several years, the EU’s international identity has begun to change. The degree and nature of this shift is still unclear. However, the EU’s adjustment to global trends will have significant implications for Asian powers. As the EU adjusts to changes in Asian power balances, so Asian states will need to adjust to changes within Europe. The article explores both the new opportunities and risks that these changes infer.

　The Euro crisis had begun since Paribas crisis in 2007, which brought about severe shock to European Union. As for the crisis that began with the management uneasiness of the subsidiary of Paribas, the crisis spread for the U. K., bank management of Germany, and it brought a European demands decline. Furthermore, the existence of the excessive government debt became clear for the Greek government as a result that the decoration of statistics was shown fiscal deficits of the Greek government from October 2009. The government debt crisis in Europe began with this.

　It is guessed that a series of crises from a financial crisis to a debt crisis gave the euro area countries particularly the Southern European countries a large amount of economic loss. They received this crisis, and EU revised some economic governance. Reinforcement of the financial governance shrinkage-like on a prior mark is also setting of the stable mechanism in Europe subsequently.

　I focus on financial governance in this report mainly and examine a problem of the economic imbalance that EU economy has. After that, I propose reforms of the financial governance including the financial move in this report. In addition, I examine a condition for it to be feasible politically last.

　This paper is constructed as follows. I examine it whether you brought the euro crisis in Section 1 as the opening. I take up a change of the governance from the euro crisis in Section 2. In Section 3, I take up the problem that EU economy after the governance reform has. In Section 4, the realization proposes the desirable reform bill which may be difficult. I examine it how reality of the politics results in ideal economic balance as a summary in Section 5.

　The digital economy has spread and developed rapidly. Thanks to this trend, individuals use search services on the Internet to obtain information and new products and services all over the world. Undertakings can easily access various markets at low costs and small and medium-sized undertakings can seize opportunities for their own growth.

　However, when a platformer, using big data, provides services convenient for users free of charge, the users’ use of the platform tends to concentrate on such platformer, the result of which is that huge platformers will eventually appear in the market. Due to costs of changing accounts or technical difficulties therefor, users become fixed customers of such platformers. This may invite the possibility that a monopoly or an oligopoly emerges in the market. In addition, when a dominant platformer acquires start-ups with excellent technology, the platformer will strengthen its dominant power, by which the acquired start-ups may risk losing their own opportunities for new business development in the market. The consideration of these matters from the perspective of competition law policy has become essential now.

　EU has introduced new legal systems into the international economic society, such as emission trading and the GDPR, and has aggressively applied EU rules, such as leniency and extraterritorial application of competition law, to date. This movement has stimulated the same movements in other jurisdictions. In this regard, the EU has a certain effective soft power in the legal world of edging the world economy along. In respect of competition law in the digital economy, in earlier times the EU applied EU competition law to the digital economy area and considered future policies therefor. While such consideration by the EU is being shared more or less with other jurisdictions, the EU may need to co-operate with other jurisdictions in relation to competition policy.

　In this paper, the EU’s perspective on the digital economy and its relationship with EU competition law, major cases under EU competition law and the future direction in competition law policy will be considered in that order. Then, I focus on movements in Japan to analyze policy making for the digital economy, the position of the Japanese Antimonopoly Law in the digital economy, major cases in the Japan Fair Trade Commission, and, recent legislative movement in Japan. Finally, possible future issues between the EU and Japan are considered.

　This paper summarizes the evolution and background of the European Union’s （EU） Free Trade Agreement （FTA） strategy, which focuses on economic objectives, since October 2016 when the EU published its “Global Europe” strategy. It also considers the substantive impact of the Lisbon Treaty on the EU’s trade agreements, the current status of the outcomes of the EU’s FTA strategy by setting targets and introducing an effective monitoring mechanism, and the role of the European Commission, particularly in trade. As a result, the analysis clarifies the following points.

　First, when the Lisbon Treaty entered force in December 2009, the EU’s exclusive competence extended to the trade of services, trade aspects of intellectual property rights, and foreign direct investment. However, the mechanism to pursue economic effects is currently limited to traditional trade-related tariff-saving effects. The topic of the negotiations of the EU-wide investment protection agreements is still being explored. On the other hand, having the EU-Japan Economic Partnership Agreement （EPA） enter into force as a non-mixed agreement is a new step from the perspective of EU integration.

　Second, to promote economic gains through the FTA strategy, the EU established trade-related KPIs and created a mechanism for monitoring progress through annual activity reports and FTA implementation reports. However, cooperation from partner countries is indispensable, such as by collecting data on preferential tariff utilization rates by FTAs. This data exchange provision was introduced with the Comprehensive Economic and Trade Agreement （CETA） with Canada, and the EU is forming a mechanism by which future agreements will reflect the improvements discovered to date. In addition, the accumulation of expertise in the European Commission contributed greatly to the creation of this mechanism.

　Third, this mechanism has progressed, and the EU-Korea FTA is regarded as the “first sample” of “new generation FTA,” and certain effects, such as tariff reduction, have been confirmed five years after the provisional application started. However, FTAs for which the negotiations began after the Global Europe Strategy did not achieve satisfactory outcomes in line with their initial goals, except the EU-Korea FTA. It is not yet possible to confirm the effects of the CETA and the EU-Japan EPA.

　Based on the discussion above, I believe that I was able to show that the EU adopted a target-management type evaluation method in its recent FTA strategy and clarified its policy of pursuing more economic effects using this method.

　Following the enforcement of the Treaty of Rome in 1958, the European Commission prepared the foundation for common fiscal policy within the member states of the European Economic Community （EEC）. The first outcome was the creation of the EC common value-added tax （VAT） system stipulated by the EC Council Directive of April 1967. How was this Directive developed? In order to answer this question, we analyse the first steps of the creation of the EC common VAT system between 1958 and 1959 and describe the initiatives taken by the European Commission and the reactions of the member states. For this, we used the Historical Archives of the European Commission and the National Archives of France.

　In the ECC, fiscal problems are dealt with in the ‘Fiscal Problems’ Direction in General Directive IV, which is an administrative unit of the European Commission. However, administrators of the ‘Fiscal Problems’ Direction could not deal with fiscal problems as a priority because these problems were not considered an important issue in General Directive IV. Moreover, because of the limited competence given to the European Commission regarding fiscal problems, the ‘Fiscal Problems’ Directive could not resolve issues related to border tax arrangements.

　In order to overcome these problems, the ‘Fiscal Problems’ Directive prepared for sales tax harmonisation in EEC countries. In the Spring of 1959, the ‘Fiscal Problems’ Directive made a working paper on sales tax harmonisation and organised a union for general directors of the member states. However, for a variety of reasons, member states refused the European Commission’s proposals, which asked them to change their fiscal systems.

　In Autumn of the same year, a small working group was created to deal with sales tax harmonisation. During the working group’s first meeting, the ‘Fiscal Problems’ Directive proposed three common sales tax systems, including a VAT system. At that time, a common VAT system was one of three possible fiscal systems; it was possible that another system could be chosen. Although France-which had already introduced a VAT system-played an important role by explaining VAT and sharing its experience of VAT with member states, the member states could not reach an agreement to create a common fiscal system during 1959. However, the European Commission’s strong initiative contributed to form an important basis to create a European common VAT system.

　The concept of “politicization” has become a keyword to describe the EU since the crises in the 2010s. However, several issues exist among previous studies. Firstly, they tend to omit mentioning the concept of general politicization. One will face great difficulty in illustrating the uniqueness of the politicization of the EU without making a comparison to general politicization. Secondly, due to the current crises and politicization, scholars have emphasized a dysfunctional aspect of the EU. Yet, in order to understand the current situation of the EU, we need to take into account the continuity from the past. Thus, it is crucial to examine the pre-crises period of the EU. In contrast to this academic background, this paper considers another concept of “Europeanization,” which received attention by academia in the early 2000s. This paper seeks to expose the EU in a changing era through a comprehensive analysis of Europeanization in the 2000s and the politicization in the 2010s.

　This paper argues that the politicization of the EU is characterized by three aspects: multi-levels, linkage, and pluralism. These features are strengthened by Europeanization. Further, this paper demonstrates the limitation of Europeanization of EU citizens. Previous studies suggested that European identity has not declined, and politicization embraces the possibility to strengthen the European polity. Conversely, this paper indicates the importance of the reexamination of the validity of such results. Although the majority of EU citizens recognize that they are European, perception gaps very well exist. Unless there is a reduction in disparity within the economy and education, Europeanization among the citizens will otherwise be constrained and the social divide will maintain. Moreover, according to Eurobarometer, EU citizens lack sufficient knowledge about the EU. Therefore, the progress of debates within the EU are hardly expected under these circumstances.

　In short, the EU as a polity has changed through Europeanization and politicization in the last two decades. The relationship among various actors has deepened through the process of Europeanization. On the one hand, the EU has been under political dynamics because of the politicization, while this does not mean that the EU has managed to create a connection with EU citizens. On the other hand, the EU is still a depoliticized institution. Therefore, the EU currently holds the aspects of both “the awaken giant” and “the sedated/sleeping giant.”

　The Economic and Monetary Union （EMU） has experienced both stagnation and progress, in other words, stop and go, since the original plan was launched in the 1960s. After the financial and fiscal crisis, the EU has declared to move towards a genuine economic and monetary union and has launched a plan for completing EMU. This paper attempts to explain why and how the EMU has been gradually developed.

　While the EU and its member states tackled the financial, fiscal and economic crisis, the EU began to address the shortcomings of the EMU and launched a plan to complete a genuine EMU. Scholars attempt to analyze such institutional development/improvement through various theoretical approaches, such as liberal intergovernmentalism, neofunctionalism, supranationalism, historical institutionalism and “Failing Forward” approach. This paper overviews understandings and analysis that are developed by such theoretical arguments, and argues that such theoretical approaches fail to grasp a dynamism towards further economic and monetary union because they ignore an international factor that pushes/drives member states and the EU towards integration. Followed by the argument, this paper also exhibits how we understand and analyze the relaunch of the plan for completing EMU by considering an international factor.

　Taking account of international factor helps us understand why the EU had experienced several crisis since its launch of the original plan for the economic and monetary union in the 1960s, and understand why the member states accept the gradual monetary cooperation through the 1980s, the start of the euro, and the relaunch of the plan for completing EMU after the crisis: The EU and its member states usually suggest integration projects in order to mediate exogenous financial and economic shocks; but, they cannot achieve complete agreements for integration due to diverged national interests and preferences; such “incompleteness” of the integration triggers financial speculation and crisis; and member states come to accept the initial plan for integration and a new plan for further integration is launched and implemented. European integration alternates between crisis/stagnation and progress, but gradually moves toward a further and more complete integration.

　In all new EU member states from Central and Eastern Europe except Slovenia, the Czech Republic and Slovakia their total populations have been decreasing since their EU accession. Especially striking are cases of Lithuania, Latvia, Romania and Bulgaria. A natural increase in population turned negative already in the 1990s in all the countries, but a decrease in total population in these four countries can be mostly ascribed to a massive emigration to advanced EU member states. As the EU has a principle of free mobility of people labor migration within the region is quite natural, but a too rapid outflow of people has been giving serious influences on the economic development of sending countries. In Lithuania, for example, during 27 years from 1992 through 2019 its population has decreased by about a quarter （24.6％）. As an aging society with fewer children in parallel with such a too rapid decrease in population is causing a lack of skilled workers and a fear that the pension budget could not be maintained in the future, this situation is taken by many people with a sense of crisis. Such a phenomenon affects also host countries. They show great consideration for migrant workers’ social integration, but it takes a time and a certain cost. If foreign workers flow into advanced EU member states at a too rapid pace, it might cause friction in their society.

　As for international labor migration, a majority of studies so far have focused on host countries, but this paper considers the problem from a standpoint of sending countries. It examines causes of such an intense emigration from Lithuania, taking into account differences from the case of Estonia where emigration is not so intense. Larger income inequality within the country has been a key factor urging people to emigrate. It seems that a series of reforms after the system change, especially the Lithuanian government’s desperate efforts to enter the Eurozone have caused strains on the society. A decrease in income inequality in the country would require an effective taxation reform and other measures.

　Assistance to new EU member states from the EU has been directed mainly to the improvement of infrastructure in poorer regions, but such assistance has not brought a creation of sufficient jobs in peripheral member states. It would be better for policies makers as well as researchers to pay more attention to challenges of development of human capital in peripheral member states.

　Bosnia and Herzegovina submitted its application to the European Union in February 2016; however, the progress of her accession process so far was just the outcome of propping-up. Every time Bosnia failed to meet the obligations, the EU eventually lowered its Conditionality to save the country.

　The so-called Dayton Peace Agreement “frozen” the ethnic conflicts in Bosnia between 1992-1995, by guaranteeing equality and the power-sharing system among the three ethnic groups, namely the Serbs, Croats and Bosniaks. In the course of post-war reconstruction, however, such mechanism has hampered any attempt to reform toward a functional state.

　The EU made remarks on the Dayton mechanism, questioning sustainability and structural flaws in it. And the EU listed as the high priority, above all, the police reform aiming to consolidate police organisations scattered across the state at various levels and to unify the chain of command into one state authority. The electoral reform of the Presidency and the House of Peoples was listed as well. Although it is not on the list, amendment to the Constitution, adopted as the Annex IV of the Dayton Agreement, is indispensable to complete those required reforms. The EU Conditionality was anticipated to become an ice-breaker of the deadlock in the Dayton mechanism, whereas such an idea turned out to be too optimistic.

　In this paper, we will examine the difficulties in transforming the Dayton mechanism with EU Conditionality, while focusing on the failure of the police reform and the electoral reform that has yet to be resolved. The first chapter gives a brief outline of the national structure in Bosnia and the problematic Dayton Constitution, and appraises the progress of the constitutional reforms including the electoral one. The second chapter overviews several matters in addition to the police reform as examples of lowering of Conditionality. Finally, we will apply the affairs discussed in previous two chapters to the conditions for success of the political conditionality in the EU Copenhagen Criteria, which Frank Schimmelfennig （2008） elaborated, to testify the Conditionality malfunction in the Bosnia’s accession process. Consequently, we will find the stalemate of ethno-politics in Bosnia, and at the same time, the EU’s incoherent attitude toward it.