White Paper - Preparation of the associated countries of Central and Eastern Europe for integraton into the internal market of the Union

1.Introduction

The pre-accession context

1.1 To help meet the challenge for the associated countries of Central and Eastern Europe (CEECs) of preparing their accession to the European Union, the Essen European Council of December 1994 adopted a broad pre-accession strategy. The Council identified the preparation of the associated countries for integration into the internal market as "the key element in the strategy to narrow the gap" and invited the Commission to prepare a White Paper.From the Union's point of view, the importance of this process lies in the needto create the conditions that will allow the internal market to function properly after enlargement, to the benefit of all members.

1.2 The White Paper represents only one strand of the pre-accession strategy set out in the Essen conclusions.That strategy relies on two main instruments: the Europe agreements and the structured relationship between the associated countries and the institutions of the European Union. The associations established by the Europe agreements will, in the view of the contracting parties, help the CEECs achieve the final objective of becoming members of the Union. The agreements include the objective of progress towards realising between the parties the economic freedoms on which the Union and in particular its internal market is based. They foresee specific efforts towards alignment with the EU and include provisions concerning the approximation of legislation.

1.3 The structured relationship with the institutions of the Union complements the bilateral association agreements with a multilateral framework for strengthened dialogue and consultation. The Essen European Council underlined that the structured dialogue should help to develop practical cooperation between the Member States and the associated countries. Such cooperation and the opportunities for sustained dialogue which it offers will be important in supporting the process of preparing the CEECs for integration into the internal market.

Background and purpose of the White Paper

1.4 A White Paper on preparation for the internal market was first proposed in two Commission Communications of July 1994 [Footnote1]. The purpose was to set out a programme for meeting the obligations of the internal market which could be followed by each associated country and monitored by the Union. It was emphasised that this would be done in partnership with the associated countries and that each associated country would need to draw up its own programme of priorities and timetable. The Commission further stressed the magnitude of the task of approximation and the need for close co-ordination and for technical assistance. The Member States could contribute their expertise, including those who had most recently undergone the process of approximation of laws in preparation for accession to the Union.

1.5 The task of approximation can only be carried out by the associated countries themselves. In seeking to assist them with this task, the White Paper recognises the progress that has already been made in all the CEECs, in particular under the impulsion of the Europe agreements. The CEECs are establishing co-ordinating mechanisms that will push forward and oversee the approximation process and comprehensive legislative strategies that reflect their own interests and priorities. To assist their planning and programming, the White Paper goes beyond a simple listing of the relevant legislation. It identifies the key measures in each sector and suggests the sequence in which approximation could be tackled. This is the White Paper's first specific contribution to facilitating the task of approximation in the CEECs.

1.6 In endorsing the proposal for a White Paper on preparing the CEECs for integration into the internal market, the European Council recognised that this involves more than the approximation of legislation. The Essen conclusions refer to "the creation of the conditions for establishing a single market" and describe the tasks faced by the associated countries, including putting into place "legislation and regulatory systems, standards and certification methods compatible with those of the European Union". Beyond the approximation of legislation, the White Paper therefore highlights and describes the structures which will be necessary to make the legislation effective. This is the White Paper's second contribution.

1.7 It was further recognised at Essen that the CEECs would need assistance to accomplish this task. Assistance with the approximation of legislation is already being provided by the Union to the associated countries through PHARE, within the framework of the Europe agreements. The White Paper shows how this assistance can now be enhanced and adapted to support the pre-accession process and to reflect the recommendations of the White Paper. It provides guidelines for the content and organisation of an intensive and coherent programme, in which the Member States are invited to play their full part. This is the White Paper's third specific contribution.

The legal context

1.8 As an element in the pre-accession strategy, the White Paper is not part of negotiations for accession and does not prejudge any aspect of such negotiations, including possible transitional arrangements. Accession negotiations will cover the whole field of Community legislation and policy, whereas the White Paper's focus is on those Community measures which create and maintain the internal market.

1.9 Nor does the White Paper change the contractual relationship between the Union and the CEECs, which is based on the Europe agreements. As provided for in the agreements, the approximation of legislation is monitored by a specific Sub-Committee. The agreements are dynamic, with some steps towards closer integration taking place automatically after a specified period and others which could be negotiated, including for example mutual recognition agreements.

The economic context

1.10 The European Council also emphasised that sound macro-economic policies are essential to the success of reform and of the pre-accession strategy. Progressive alignment with the Union's internal market policies will reinforce the competitiveness of the CEECs' economies and increase the benefits of transition thus contributing to the achievement and consolidation of macro-economic stability. The immediate requirement is to adjust the sequence and pace of legislative approximation in each associated country so that it reinforces economic reform.

1.11 Economic reforms in Central and Eastern Europe are developing the institutions which provide the foundations of a market economy. They include a system of legal and commercial rules (for example commercial code, property law, bankruptcy legislation, contract law, consumer law) which ensure both legal security and transparency for economic operators. They also include the institutions such as firms, markets and regulatory bodies which make possible decentralised financial intermediation through private agents. Further progress with privatisation is crucial in this context. Efforts to create a better qualified workforce are also a key element for the success of economic reform and the transition to a market economy.

1.12 Aligning with the Union's internal market legislation goes further than the economic reforms necessary to put in place a market economy. It aims to facilitate the integration of the economies of the CEECs, which are at different stages of development, but which are all still in transition, with the industrial market economies of the Union. It will require more time both for legislating and for building the institutions needed to ensure the actual implementation of new laws and to monitor progress. Consolidation of judicial reform in the CEECs is also part of this process. Without the necessary institutional changes, the adoption of internal market legislation could result in a merely formal transposition of rules. This would not be an adequate basis for the mutual confidence between all participants on which the internal market depends. Nor would it achieve the real economic impact and benefits which the associated countries are seeking.

1.13 The sequence and pace of the strategy adopted by each CEEC for its gradual alignment with the Union's internal market legislation will need to be regularly reviewed to maintain coherence with its economic reform efforts. More transparent competition and trade policies harmonised with the Union's policies over the medium term will also be needed to support the progressive integration of the EU and CEECs' economies and, at the same time, favour economic reform.

The approach and structure of the White Paper

1.14 The White Paper is focused on the legislation which is essential for the functioning of the internal market. It presents this legislation in a way which shows the key measures in each sector and those measures which should be tackled first, but it does not attempt to establish priorities as between sectors. It also describes in some detail the administrative and organisational structures which are required in each sector if the legislation is to be effectively implemented and enforced.

1.15 The White Paper is addressed to the six countries which already have association agreements (Poland, Hungary, the Czech Republic, Slovakia, Bulgaria and Romania) and will apply equally to those which are negotiating Europe agreements with the Union (currently the three Baltic Republics, which have initialled agreements,and Slovenia). The White Paper is a general reference document which does not adjust its recommendations to the requirements of any particular country. Each CEEC will establish its own priorities and determine its own timetable in the light of its economic, social and political realities and of the work it has achieved so far.

1.16 The White Paper is presented in two parts. The first part analyses the purpose, context and nature of the exercise in political terms, and indicates how it may be followed up. The second part in Annex is the detailed presentation of Community legislation in the internal market area.

Chapter 1: the present chapter describes the context, scope and approach of the White Paper.

Chapter 2 provides a background picture for the exercise. It identifies the essential characteristics of the internal market and explains its importance. It describes how Community law has tackled the dismantling of various kinds of barriers to free movement; and it discusses the fundamental role of competition policy in relation to the internal market

Chapter 3 describes how legislation relevant to the creation and maintenance of the internal market has been selected and prioritised for the purposes of the White Paper. The chapter explains how the sector by sector fiches in the Annex have been prepared and their purpose.

Chapter 4 describes in broad terms the situation in the CEECs, in relation to both legislation and structures and identifies some particular difficulties they face in achieving alignment with Community rules and practices.

Chapter 5 concerns the continuing assistance which the Union will provide to the CEECs to support their efforts to prepare for the internal market and indicates a new delivery framework within which existing EU measures could be strengthened, supplemented and made more coherent. Particular attention is given to achieving closer co-ordination with Member States' technical assistance activities.

Chapter 6 indicates the benefits which implementing the White Paper's recommendations can be expected to bring; and the action to be taken by the Commission, the associated countries and the Member States to ensure that these benefits are realised.

Annex

This larger volume contains the sector by sector analysis of the key items of relevant Community legislation, explaining the purpose and development of legislation in each sector, describing the structures that are necessary to ensure its implementation and enforcement and suggesting the sequence in which legislation in each sector might be tackled. The Commission believes that the emphasis on how to ensure that the legislation is made effective is an important message for the associated countries and one which will be helpful to them and ultimately to an enlarged Union in achieving real rather than simply formal alignment.

Footnotes

<1>Documents: 13 July 1994 (COM(94) 320 final)
26 July 1994 (COM (94) 361/3) [Back to text]

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