Step 1: Understanding the Schengen Treaty
- The Schengen Agreement (also called the Schengen Treaty) was signed in 1985 in Schengen, Luxembourg.
- It led to the creation of the Schengen Area, where internal border checks between participating European countries were abolished.
Step 2: Connection with organizations
- ASEAN: Refers to the Association of Southeast Asian Nations, unrelated to Schengen.
- European Union: The Schengen Treaty is directly associated with the European Union, as it integrates freedom of movement across EU member states.
- NATO: A military alliance, not related to free movement of people.
- World Bank: Deals with financial and development aid, not migration or border treaties.
Step 3: Conclusion
Thus, the Schengen Treaty is related to the European Union.
\[
\boxed{\text{Correct Answer: (B) European Union}}
\]