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You are here: Home > Current Topics > Mind your Business > 12 January 2004 |
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Poland and EU Enlargement:
The main benefits of joining the EU to Poland can be summarised as follows:
For the existing members of the EU, the enlargement will have reciprocal benefits - larger markets in which to sell its products, opportunities for investment and expansion with the resulting benefits of economies of scale that can result. However, for both Poland and the members of the EU there are serious concerns about the enlargement. These can be summarised as:
Supporters of enlargement do not dismiss these potential problems but suggest that the increased investment and competition will lead to greater efficiencies that will largely offset these problems, but there is no doubting the likelihood of a painful adjustment period. The Poles themselves look to the likes of Portugal, Spain and Greece as examples of how countries that were (in relative terms) poorer than their partners on joining are now seeing increased growth and prosperity with living standards rising. |
The European Union is an example of a customs union. A customs union has free trade between member states but a common external tariff on imports from outside the Union. The EU has developed over the years since 1958 into a body that has not only developed closer economic ties but also political ties. The establishment of a single currency further supports the single market for some of the members that helps to encourage trade and ensures greater transparency of prices across borders. The aims of the EU are to promote the following:
There are also a number of problems that arise when considering a customs union like the EU. Some would argue that setting up a 'club' and imposing tariffs on imports punishes weak countries that need access to such markets. Agricultural support for farmers in the EU for example means that farmers in less developed countries find it very difficult to compete. Other criticisms include the problems caused by the administration that is needed to support the EU - corruption in the Commission, the massive cost of the CAP, a lack of understanding of cultural and regional needs - see the arguments over the Common Fisheries Policy for example - the bureaucracy and red tape, the fudging of key issues are all major concerns. In addition, with access to markets outside the Union subject to tariffs, some businesses may argue that they are being penalised and access to cheaper goods and service might be denied to the population. The possibilities of getting a true single market is never likely to happen in the eyes of many. Whilst tax rates remain highly differentiated for example, there will never be a 'level playing field' and the fact that countries can opt out of EU wide decisions such as the Social Chapter and the euro reduces the impact of the single market's effectiveness.
Note that in this discussion, the issue of political independence, European defence policies and the like have been deliberately ignored - they are issues but tend to be political ones. In many cases it is impossible to separate the political from the economic - for example, over the issue of interest rate policy in Europe and how it affects individual countries.
What is not in doubt is that the influence of the EU over the lives of its citizens will not diminish but as countries like Poland seek to join the problems of managing a large and often seen as 'unwieldy' body are going to get more problematic. The stance taken by Poland over voting rights in the new constitution is one such example. It has already provoked anger within existing leaders - most notably Germany and France.
Population: 38 million
Currency: Zloty comprising 100 groszy
Inflation: 1.9%
Unemployment rate: 18.1%
Proportion of population below the poverty line: 18.4%
Proportion of population employed in agriculture: 20%
Contribution by sector to GDP: Primary - 5%, Secondary - 32%, Tertiary - 63%
(Sources: The Economist (http://www.economist.com/countries/Poland/profile.cfm?folder=Profile%2DEcon
omic%20Data) and Greek Orthodox Church ( http://www.greekorthodoxchurch.org/wfb2002/poland/poland_economy.html)
Data Source: The Economist
You are an economist working as an advisor to the government in the Foreign and Commonwealth Office. The Secretary of State is to attend a Cabinet Briefing session on the implications for the UK of the enlargement of the EU in May 2004. You have been asked to write a report for the Secretary of State to provide information to be used at this meeting assessing the likely impact on the UK of Poland's entry to the EU specifically.
Your report should be dated January 2004, be a maximum of 2000 words and should include the following:
You will be given credit for demonstrating analysis and evaluation skills, your use of economic principles as well as for the effective use of the data provided along with any other data you might choose to use.
Total marks available = 100
Knowledge and Understanding (AO1) 15 marks
Application (AO2) 25 marks
Analysis (AO3) 25 marks
Evaluation (AO4) 35 marks
It is important to remember that there is a heavy weighting towards the higher order skills in this task. To be able to demonstrate these skills it is important to think through your answer prior to starting and work out what you are going to say when and where. You clearly must address the key requirements laid out in the question, but how you support what you say will be very important. The use of the data in the evidence needs to be carefully considered and any other data you can gather (for example, by looking up the nature and extent of the trade between Poland and the UK) will be an important part of the analysis that will allow you to be able to evaluate effectively.
The case for Poland joining the EU has been explained in the background information given so you will have to be selective in how you use that information - do not just copy it out, but try to give the information a different slant whilst retaining the flavour of the information. This is essentially the benefit to Poland and the UK of their membership, but using the data on the trade between the countries could help you to be able to offer some support to the general claims made in the background information.
Having used the information carefully you should be in a position to be able to make some assessment of the impact of Poland's entry - will it be of benefit to the UK? Are there significant opportunities for the UK in Poland being in the EU (again this will be reinforced by the nature of the trade between the two countries)?
Finally you should draw your conclusion about the importance to the UK government of embracing Poland - should the government seek to develop good relations with Poland? Yes, if it can be of benefit to UK business, but if the benefit is only going to be minor in your opinion, again backed up by the 'facts' you use to support your previous arguments with, then the costs of 'courting' the Poles may not be so worthwhile.
From the guide given here, it should be clear that the quality of the facts you gain about the nature of trade between the two countries, the expectations you have attached to the trends in the Polish economy and the expected benefits to Poland of membership will be crucial in determining the quality of your answer.
2004 sees the long debated and long awaited enlargement of the European Union (EU). The process of enlargement began in 1998 and culminated with agreement at the intergovernmental conference in Nice in 2000. Poland became a signatory to the Nice Treaty in February 2001 and is due to join the EU in May. Late last year, the Poles made their mark on the EU when they refused to back down over the issue of voting rights in the new enlarged EU and forced the collapse of talks in Brussels aimed at securing a new constitution for the enlarged EU. The enlargement of the EU is seen as being a major challenge as former communist bloc countries join the Union. Poland is, in many respects, typical of those countries - it has embraced market economic reforms but still faces massive adjustment problems to allow it to be able to compete effectively in the EU. Poland is therefore a useful case study in the problems and benefits of enlargement of the EU.
