The
Essen European Council asked the Commission to
conduct a "detailed analysis of the effects of
enlargement in the context of the Union’s
current policies and their future development".
The Commission prepared an interim report for the
Madrid European Council, drawing attention to the
advantages of enlargement in terms of peace and
security as well as economic growth and development
in Europe as a whole. It identified certain areas in
which enlargement would have a marked impact on Union
policies. In response to the European Council’s
request, this analysis has been pursued in greater
depth with particular reference to the common
agricultural policy and structural policies.
The
results of this work (see volume II of COM 2000)
confirm that Union enlargement to some 25 countries
and 475 million inhabitants will bring considerable
political and economic advantages, and will further
Union policies if certain conditions are met.
Enlargement
will, however, bring greater heterogeneity to the
Union and some sectoral and regional adjustment
problems will result. These could limit the benefits
of enlargement and make more difficult the further
development of the acquis unless adequate
preparations are made.
It
is vital to use the pre-accession period to the full
to ensure that the applicants make adequate
preparations for membership. This will require
substantial investment in sectors such as the
environment, transport, energy, industrial
restructuring, agricultural infrastructure and rural
society. The funds needed will have to come from
public and private sources in the applicant countries
themselves, the Union and other providers of foreign
capital. Standards among the applicant countries are
generally low in the social sphere, in particular in
the areas of public health, unemployment and
health and safety at work. Too slow an adaptation of
their standards could undermine the
unitary character of the acquis and
possibly distort the operation of the
single market. Supporting the process of
adaptation will be necessary in the reinforced
pre-accession strategy.
1.
Agriculture
In
most of the candidate countries currently important
price gaps (in the sense of lower prices than in the
EU) exist for the main commodities. In the crop
sector these vary from around 10-30% for cereals,
oilseeds and protein crops to 40-50% for sugarbeet
(although for sugar the price gap is generally
somewhat smaller) and in the livestock sector from
30-40% for milk and dairy products to 35-45% for
beef. For the cereals based meats (pigmeat and
poultry) price differences are relatively small. For
certain fruit and vegetables important price
differences exist (e.g. up to 80% for tomatoes). A
further increase in producer prices in these
countries can be expected from here towards the
middle of the next period of financial perspectives,
which will somewhat reduce, but not eliminate the
price gaps.
By
then, the gaps for cereals and beef may have largely
disappeared if the proposed reforms are carried out.
For sugar and dairy and certain fruit and vegetables
price gaps in the order of 20 to 30% or higher can
still be expected to exist in the medium term. For
the sugar and dairy processing industry in these
countries overnight price alignment (i.e. full
integration into CAP from day one) would imply an
important hike in their raw material price, while at
the same time facing the full competitive pressure
from the Single Market. Introduction of quotas would
counteract the tendency to increase sugarbeet and
milk production under influence of the higher
producer prices. Domestic demand could be expected to
be negatively affected, increasing sugar and dairy
surpluses in these countries. For certain fruit and
vegetables, immediate integration in the CAP would
provoke market imbalances.
The
primary sector in candidate countries, with a
relatively large average size of holdings, in
particular in the arable crop sector, would face
relatively few problems in integrating into the CAP
market and price policy. In the livestock sector such
integration will take longer, in view of the capital
investments, restructuring and the reorganisation of
management still needed. In some candidate countries
agricultural structures are weaker due to the much
smaller average farm size.
In
the downstream sectors, including the first
processing stage, large efforts in restructuring and
modernisation remain necessary in all countries,
although those countries with relatively large
foreign investment in the food processing industry
would seem to be more advanced. Adjustment pressure
on the CEEC food industry when entering the Single
Market is expected to be large, in particular in
those industries faced with increases in raw material
prices and in those countries with a weak primary
sector.
The
weakness of their farm sector and agri-food industry
and the foreseeable price differentials make it
necessary to envisage for most of the applicant
countries a transition period that could vary in
length according to the country concerned. Such a
transition period would make it possible to cushion
the shock of price adjustment to the extent necessary
and would avoid exposing the applicant
countries’ processing industry to excessive
competition. In all events, there would be no need
during this period to provide direct income support
such as that resulting from the 1992 CAP reform. On
the other hand, the applicant countries should be
able to receive aid for developing their agricultural
and processing structures in order to gradually
prepare them for full integration into the common
agricultural market.
2.
Cohesion policy
The
continued commitment to economic and social cohesion
which results from the first part of this
communication implies that new member states as of
accession will progressively - and in line with their
absorption capacity - benefit from the co-financing
under the Union’s structural policies. Towards
the end of the next period of financial perspectives
(2000 - 2006) it would thus be possible that
financial transfers from the structural policies
would be comparable to those attributed to Union
Member States lagging behind in their development.
It
is of utmost importance to familiarise the applicant
countries with the structural policies’
principles and procedures in order to prepare them
before accession for the progressive introduction of
Union structural policies. To this effect - in the
context of the enhanced pre-accession strategy -
applicant countries should benefit from pre-accession
assistance to prepare themselves.
It
should also be pointed out that the high level of
co-financing by the Cohesion Fund (85%) should permit
from the outset of accession and given the existence
of a convergence programme, financing of important
projects in such sectors as environment and
trans-European networks which are crucial to their
integration into the Union.
3.
Implementing the single market
A
fully operating Single Market is of crucial
importance to the new member States as it offers
potential for growth and jobs. Hence the importance
of applying in advance of accession all the elements
of the White Paper on the Single Market, through a
specific procedure. Only then a full application of a
Single Market without border controls is conceivable.
Possible
difficulties related to trade in agricultural
products or to free movement of workers and of
persons in general should not prevent the full
implementation by the candidate countries of the
measures foreseen in the White Paper related to the
abolition of border controls.
4.
Implementing environmental standards
Environment
is a major challenge for enlargement: while the
adoption of the Union’s environmental rules and
standards is essential, none of the candidate
countries can be expected to comply fully with the acquis
in the near future, given their present environmental
problems and the need for massive investments.
These
problems are far more severe than those faced by
present Member States. The persistence of a gap
between levels of environmental protection in present
and new members would distort the functioning of the
Single Market and could lead to a protectionist
reaction. This situation would affect the
Union’s capability to develop its environmental
policy.
Nonetheless,
effective compliance with Union environmental
standards would necessitate, apart from important
legislative and administrative efforts, massive
investment in the ten applicant countries.
Such levels of investment would appear unsustainable
for national budgets even in the long term. The Union
will not be in a position to cover the resulting
financing gap by the time of enlargement. Investment
for the adoption of the acquis, however, is
one of the priorities of the reinforced pre-accession
strategy, and forms the basis of the reorientation of
Phare.
This
apparent impasse can be tackled through a two-fold
approach:
- In
partnership with the Union, realistic
national long-term strategies for gradual
effective alignment should be drawn up and
start being implemented in all applicant
countries before accession, in particular for
tackling water and air pollution. These
strategies should identify key priority areas
and objectives to be fulfilled by the dates
of accession as well as timetables for
further full compliance; ensuing obligations
should be incorporated in the accession
treaties. All new investments should comply
with the acquis.
- Important
domestic and foreign financial resources, in
particular form the private sector, will have
to be mobilised in support of these
strategies. The Union will be able to make
only a partial contribution.
5.
Transport
Very
important investment in the applicants’
transport infrastructure will have to be made, to
avoid bottlenecks resulting from increasing flows and
to allow for the full benefits of integration to be
reaped. Development of transport infrastructure is
also likely to be a high priority for the applicant
countries themselves. Investment needs in transport
infrastructure will be very high and an important
part will have to be financed from sources other than
national budgets. Substantial support will be needed
from the Union for TEN-related corridors.
Full
adaptation to Union safety and other technical norms
will be necessary for a smooth enlargement. On the
whole, operators should be able to bear the cost of
gradual adaptation involving substantial renewal of
fleets. However, specific measures might be needed,
mainly in the railway sector, to encourage a
favourable modal development in line with the
orientations of the Common Transport Policy, and to
address the consequences of restructuring.
6.
Nuclear safety
The
nuclear industry accounts for 30% of
electricity-generation in the applicant countries, on
average, and as much as 80% in some countries. Most
of the power stations were built using Soviet
technology and do not meet international safety
standards.
The
solution is not simply to close them down, as they do
not all pose the same risk and the cost of obtaining
alternative energy supplies would be extremely high.
Several of the applicant countries have already begun
constructing new nuclear power plants, which they
consider the least expensive way of meeting
growth-led energy demand and of achieving
independence in the energy sector.
The
Union must protect the life and health of its present
and future citizens. This implies that the applicants
should co-operate fully in efforts to bring their
levels of nuclear safety up to international
standards, in accordance with the approach of the G7
since 1992. This implies that:
- Where
western-designed nuclear plants are in use
(Romania and Slovenia), developments should
be monitored to ensure that operations comply
with the appropriate safety standards.
Technical assistance can be provided if
necessary.
- Where the
safety of Soviet-designed nuclear power
stations, which are in operation or under
construction, can be upgraded to meet
international safety standards, modernisation
programmes should be fully implemented over a
period of 7-10 years. (This applies to
Dukovany and Temelin in the Czech Republic,
Paks in Hungary, and certain units at
Bohunice and Mochovce in Slovakia and at
Kozloduy in Bulgaria.)
- The
timetables agreed by the governments
concerned, subject to certain conditions, for
the closure of non-upgradeable units must be
respected. (This applies to Bohunice in
Slovakia, Ignalina in Lithuania and certain
units at Kozloduy in Bulgaria.)
- Meanwhile,
the urgent improvements called for by
international experts should be carried out.
The
plant closure commitments given by Bulgaria and
Lithuania in return for loans granted by the
EBRD/Nuclear Safety Account were subject to certain
conditions. The Nuclear Safety Account Agreement
entered into in 1993 by Bulgaria provided for the
closure of the four units concerned at Kozloduy as
soon as other duly specified energy sources became
available. The necessary work was to be completed by
the end of 1998; this timing having slipped, it is
now thought that units 1 and 2 could be closed in
2001 and units 3 and 4 in 2001/2002. The Nuclear
Safety Account Agreement concluded in 1994 with
Lithuania for the closure of two units at Ignolina
provided for the first to close in 1998 and the
second in 2002; however, their operation could be
extended until 2004 and 2008 at the latest if certain
criteria were fulfilled.
Slovakia
has not taken on any international commitments
concerning the closure of the two reactors concerned
at Bohunice, but the government adopted a resolution
in 1994 whereby these reactors would be closed down
by the year 2000 at the latest if the two new units
under construction at Mochovce have in the meantime
entered into commercial operation.
Agreement
should be reached as soon as possible between the
institutions providing financial support and each of
the countries concerned on the earliest practical
date for the closure of the nuclear power stations in
question and a support programme to make their
closure possible. These programmes should be prepared
by the EBRD, together with PHARE, EURATOM and the
World Bank, which should co-ordinate closely.
Such
co-ordination should be extended to all assistance
and modernisation operations. Given the amounts in
question (some 4-5 billion ecus for the main
operations over ten years), the Union will be able to
make only a partial contribution.
The
Union should co-operate closely with the safety
authorities of the countries concerned to create a
climate favourable to nuclear safety, and
should support their independence vis-à-vis
the political authorities.
7.
Freedom, security and justice
Justice
and Home Affairs became part of the Union’s
agenda with the entry into force of the Treaty of
Maastricht. The Treaty of Amsterdam transfers some of
these areas into Community competence and reinforces
cooperation in the residual third pillar areas. It
moreover integrates the Schengen agreements into the
Treaty on the European Union. All applicant countries
are to a varying degree confronted with the
challenges of the fight against organised crime,
terrorism, trafficking in women and drugs.
The
control of external frontiers and respect for
international norms in fields such as asylum, visas
and immigration brings an added dimension. The
geographical situation of some of the applicants
exposes them to risks of importing problems from
their neighbours.
The
impact of these factors on the present Union is
already apparent. But the enlargement of the Union
provides an opportunity to address more effectively
common problems in these fields which affect both the
present Union and the applicants.
Some
applicant countries began determined reforms in this
area early on. Others have experienced delays notably
due to changes in government. Overall, their
achievements both in legal terms and in practical
implementation varies considerably. However the lack
of trained and experienced manpower is a common
feature.
In
these fields institution building in the
pre-accession period will also be of utmost
importance.
8.
Border disputes
Enlargement
should not mean importing border conflicts. The
prospect of accession acts as a powerful incentive
for the states concerned to settle any border
disputes. The Stability Pact promoted by the Union
between May 1994 and March 1995 has also been
influential in this regard. Today several disputes,
of low intensity, among applicants remain to be
resolved.
The
dispute between Hungary and Slovakia over the dam on
the Danube is before the International Court of
Justice, while the question of the maritime frontier
between Lithuania and Latvia is in the process of
being settled. Some of the applicant countries also
have unresolved disputes with third countries. The
Commission considers that, before accession,
applicants should make every effort to resolve any
outstanding border dispute among themselves or
involving third countries. Failing this they should
agree that the dispute be referred to the
International Court of Justice.
In
any event, all candidate countries should therefore,
before accession negotiations are completed, commit
themselves to submit unconditionally to compulsory
jurisdiction, including advance ruling of the
International Court of Justice in any present or
future disputes of this nature, as Hungary and
Slovakia have already done in the abovementioned
disagreement.
9.
Applying Community rules in advance of accession
The
applicant countries must abide by commitments they
have made in the framework of the WTO and the OECD.
But there have been a number of disputes between the
Union and certain applicant countries, in cases where
the latter have put international rules, such as the
most favoured nation clause or certain trade
arrangements, above the provisions of the Europe
Agreements and their future obligations as member
states. Such an approach is contrary to the spirit of
gradual adoption of the acquis communautaire.
Stepping up the pre-accession strategy should
therefore include finding solutions to these
problems.
The
application before accession of certain Community
rules on competition and state aid is also needed.
This implies that the Commission should be asked to
approve or, in any event, be consulted on national
decisions by the authorities in the applicant
countries.
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