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EU Enlargement

• What is EU Enlargement?
• What are the consequences of enlarging the EU?
  • Advantages
  • Disadvantages
• Economic data
  • Balance of Payments
  • GDP
  • Human Development Index
  • Inflation
  • Unemployment
  • All data by country

What is EU Enlargement?

The EU expanded its membership from 15 to 25 in May 2004. Two further countries are negotiating to join by 2007. The enlargement countries consist of many of the former Soviet Bloc countries of central and Eastern Europe as well as Cyprus and Malta.

Candidate countries must meet a set of criteria, called the 'Copenhagen Criteria', before negotiations on their membership can commence. These criteria are:

• To be a stable democracy, guaranteeing human rights, the rule of law and the protection of minorities
• To be a functioning market economy
• To adopt and implement the body of EU law

The EU consists of 15 Member States, with 10 New Member States due to join in May, 2004. Map courtesy of www.theodora.com/maps used with permission.

What are the consequences of enlarging the EU?

Enlargement of the EU is not a new concept, for instance, Austria, Finland and Sweden only became members in 1995. The issue that concerns most in this next wave of enlargement is the economic disparity between the existing and new members.

Click on the links below to view economic data for the EU Member States, New Member States, Applicant Countries and Turkey. The data may be viewed by subject or by country.

Balance of Payments
GDP
Human Development Index
Inflation
Unemployment
All data by country

Advantages

• Economic growth. Enlargement will generate economic growth in both 'old' and 'new' member states: in the new states the reform of economic systems to a market economy will generate increased productivity and efficiency and allow them to be able to take advantage of the Single Market through increased trade; in the old states as trade and investment opportunities increase with the new states. Estimates suggest that job totals could increase in old member states by 300,000.
• Stability. Membership of the EU will bring with it political stability to the new democracies of Eastern Europe as they reform their legal and government institutions as part of the accession process. Such stability is important in generating investment not only from within the EU but from outside it, thus contributing to further economic development.
• Global Presence. The EU has a stronger global voice, as its enlargement has brought the population to over 500 million (more than the USA and Russia combined), so giving more weight in international negotiations such as trade policy.
• Business Confidence. Companies in existing Member States will have more confidence with those in the new Member States, as they will be operating on a level playing field in terms of EU legislation. Again, business confidence is an important factor in generating investment and encouraging enterprise and initiative.
• Foreign Direct Investment (FDI). Membership of the EU and the euro will increase the amount of Foreign Direct Investment in the New Member States.
• Structural Funds. The regional aid which attempts to redistribute funds from the wealthier regions of the EU to the poorer ones will be made available to the New Member States. This will help develop these countries and improve infrastructure. Improvements in infrastructure will again be a benefit to trade and in theory, all countries involved will benefit - the new member states from improved internal infrastructure and the old member states from the extra revenues earned from new trade.

The opening of the Maria Valeria bridge across the Danube connecting the Slovak town of Sturovo with Oestergom in Hungary in October 2001.
This project was financed by the EU PHARE programme, which assists the applicant countries of central Europe in their preparations for joining the European Union. Reproduced courtesy of the European Commission. Copyright: EPA PHOTO CTK/JANA MISAUEROVA.

Disadvantages

• Migration. Enlargement could produce high levels of migration as workers move from the new member states such as Poland where unemployment is high at 16.7% to those old member states where it is low such as the Netherlands at 3.6%. It was anticipated that workers would be able to move freely as the EU operates on the principle of the Single Market - one of the 'four freedoms' inherent in the Single Market is the free movement of labour. However, the old member states have created restrictions on the entry of labour into their countries for at least the first two years of enlargement.
• Common Agricultural Policy. The controversial Common Agricultural Policy will be extended to the new member states, many of which have predominantly rural economies. The CAP includes measures such as subsidies and income guarantee schemes for farmers, which could prove to be hugely expensive if extended and a drain on the economies of old member states.
• Regional Aid. The difference in GDP per capita between the old member states and the new member states is stark. This is also reflected in the ranking of each set of countries in the UN Development Programme's Human Development Index (HDI), which combines indicators of life expectancy, education, literacy and GDP. This difference in wealth and standard of living could be another drain on old member states in two ways - firstly, old member states may need to contribute more as the demand for regional aid increases, and secondly, old member states currently receiving regional aid such as Spain and Greece find their aid reduced as money is channelled elsewhere.
• EU Standards and Systems. There are concerns that some New Member States will not have the necessary standards and systems in place, e.g. in meeting standards in food hygiene, and regulations on agricultural production. Meeting environmental standards may be too high a cost for some, while bringing public services up to standard will mean increased taxation for many citizens of the New Member States.
• The Legacy of the Soviet Economy. In some of the states of the former Soviet bloc, certain areas of industry may not have had time to catch up with those of the EU and find they are forced out of business when these countries join the Single Market.

Web sites for further research:

• EU Enlargement - Europa (http://www.europa.eu.int/comm/enlargement/index_en.html)
• Foreign & Commonwealth Office - Government Policy on EU Enlargement (http://www.fco.gov.uk/eu/enlargement)
• Department of Trade & Industry - Additional Government Policy on EU Enlargement (http://www.dti.gov.uk/europeandtrade/europe/enlargement/page9123.html)
• Europlus - a fun guide to the new and future members of the EU (http://www.europe.org.uk/youth/schools/europlus/)
• BBC Guide to Enlargement (http://news.bbc.co.uk/1/hi/in_depth/europe/2002/eu_enlargement/default.stm)
• Individual country profiles:
  • BBC (http://news.bbc.co.uk/1/hi/country_profiles/default.stm)
  • Foreign & Commonwealth Office (http://www.fco.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1007029394365&continent=2)
  • UK Trade & Investment (http://www.trade.uktradeinvest.gov.uk/sector_and_market/sector_markets_sims/market_information.shtml)
  • Europa - New Member States and Applicant Countries only (http://www.europa.eu.int/comm/enlargement/candidate.htm)

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