Economic arguments for further enlargement of the EU - Essay Example

Economic arguments for further enlargement of the EU Abstract Having grown from six starting members – the Inner Six, as they are often referred to – to a total of 27 countries currently, the expansion of the European Union has been a constant, if not consistent, process since 1952 to today. The expectation of the European Union council is that expansion phases bring prosperity to the new member countries as well as the EU overall, but the steady process of integration is not one that has been met without criticism. Arguments are brought forth against it, based on the conditions required to allow membership, economic implications for current members and the political cost of doing so, all in the short term as well as the long-term. This report aims to examine what those arguments are, and aims to provide sufficient economic arguments in support of further enlargement in the European Union. Steps are then outlined to help enforce a positive understanding towards the economic benefits of expansion. Introduction The enlargement of the EU is one of the most debated topics presented to relevant councils. When the European Union was first formed in 1952 there were only six member countries. Today, there are 27 member countries in the European Union, and this number is scheduled to be increased in 2013. The European Union has been inducting newer countries into its council on an irregular basis since 1952, after subjecting applicant countries through a long process requiring pre-accession treaties, assessment conditions and a set of criteria – the Copenhagen criteria – that must be met before membership is granted. The process can take a number of years and after the induction of Bulgaria and Romania in 2007, Croatia is set to become a member of the EU in June 2013. Other countries like Turkey, Iceland and the Western Balkans are in accession negotiations to follow suit. Membership generally offers great benefits to member countries, particularly those struggling to make the move from being developing nations to being developed ones. The European Union provides an economic and political support that smaller countries, or at least countries with smaller economies, can use to enhance their global standing, both within and outside Europe (Sjursen, 2002). But what is the impact that this expansion has, whether on the currently existing members of the European Union, the European Union as a whole, or even in fact Europe in general? Surely there must be certain economic and political impact such a membership must have, and economic advantage is generally gained on the expense of another party’s disadvantage. While that may be true, and in fact is to a certain point, it is not quite as limited as that. The results of many surveys, reports and inquests has shown that the general perception among Europe’s public seems to be that membership offers great benefits to newer members, while offering little to no benefit to older members. This perception might not be in the majority – with statistics varying from country to country – there is no doubt that it is a sizable portion of the public, any country or sample considered. Evidence supporting this matter is given further in the report, built generally upon information provided by the British Parliament in 2006. As negative as general perception might be however, expansion has always shown to result in positive economic and political impact. This is true of any series of expansion, but this report will particularly center its focus on countries inducted in 2004, as they have had sufficient time to determine the effect of membership on their economy, as well as the impact of their membership on the European Union members in general. In fact, not only are the arguments brought forth against expansion generally baseless, with little evidence to support their claim, inverse evidence shows that economic arguments supporting expansion of the European Union are largely misunderstood, or otherwise overlooked. This report aims to provide economic arguments supporting expansion, with statistical evidence to support the claim. Negative Arguments against Enlargement The arguments against expansion seem to be divided in two main streams – political and economical, with the latter having sufficient weight over the former. In general, citizens of countries that are preexisting members of the European Union fear for jeopardy regarding their own political and economic freedom (Cowles and Smith, 2000), this being the root of all arguments against expansion and enlargement of the European Union. Before considered the economic arguments against enlarging the European Union, the political arguments will briefly be touched upon. While they may be shadowed by the stronger economic arguments, there is no doubt that these arguments in their own right serve to perpetuate the cycle of aggression towards newer members being included in the European Union (Andriessen, 1999). Political arguments center on the possibility of resulting chaos and unrest, both within the Union and outside, should membership be granted openly and freely. While a unified and integrated union was one of the initial founding aims of the EU, the fact is that more countries make it more difficult to establish the peaceful, unified Europe seen in that initial and ultimate aim. This is partially because more voices within the council would mean more likelihood of inner disruption and disaccord. It would mean less harmony and more struggle to achieve unanimous or majority decisions. Furthermore, as the number of countries on either side of the border – inside the EU and outside – increase, so does the probability of conflict risk on that account (Van Den Broek, 2007). On the other hand, with the risk of granting and rejecting membership on a country-to-country basis, the possibility of resulting animosity cannot be avoided, whether between rejected countries and the EU, or rejected countries towards newly accepted ones. All factors considered, with the possibility of enlargement comes the possibility of disrupt and unrest – exactly what the EU was hoping to eliminate upon its founding. Other political fears can be based in cultural differences – a possible reason for Turkey facing the most opposition regarding its pending membership into the European Union (European Union Committee Report, 2006) – or insecurity regarding their own power. More members would mean a greater division of power among newer members, which would of course mean less power to existing voices. All these factors together help the economic arguments against enlargement gain momentum and perpetuate the negative sense of aggression towards countries hoping to gain membership. Stronger than the political arguments against expansion however are the economic ones. According to a survey conducted by the Eurobarameter in 2006, 60 percent of those polled viewed expansion as a positive impact in terms of political development, but over 50 percent deemed it as economically damaging, particularly participants from member countries. This shows that the main fear citizens have regarding expansion is of economic unrest. In other words, member countries fear for the economic stability and purpose of the European Union, should lesser developed countries be brought to the same pool of resources as theirs. Results of the same survey, Eurobarameter (2006) showed that citizens in member countries feared unemployment, on account of increased labor from newer members hoping to leave slower economies of their own country in search of higher paying jobs in countries with greater economic standing. To examine where these economic fears arise from, one does not have to look very far. A cursory look at the history of enlargement and membership approvals shows that there is a stark difference in economies between older members and newer ones looking to gain admission into the European Union. At the very basic level, one of the main reasons economic arguments arise against accession countries is the fact because they are newly inducted countries, they do not have the same economic standing as countries that have been long standing members of the EU (Hagen, 1996). This is not only because of the support system the EU offers in terms of political and economic expansion but also because of the fact that developing economies are granted admission only when they have fulfilled the basic Copenhagen Criteria. Whether they do so by the bare minimum or a comfortable margin is not of importance, and so when all the countries are ultimately compared, newer members often have a far lower economic standing than older members. To overcome or compensate for this divide, use is made of the EU funds. This means one of two things in return – countries that are currently relying on the fund will either have to cut back, or the fund will have the be expanded. The former is not desirable by those of lesser economic standing; the latter is not desirable by those of greater economic standing. Further evidence supporting economic concerns of countries towards expansion is how according to Barysch (2003), attitudes towards expansion are favored during times of economic development in general European economy. Similarly, when the overall economy seems to be failing, so does a positive attitude towards expansion. This shows that countries find newly inducted members to be an economic liability rather than an economic aid, and are hence averse to the idea. A publication by the European Union committee (2006) supports this feeling and states that aversion towards expansion comes not only from fears centered on economic conditions, but also from a lack of general understanding regarding the positive effects of expansion, both economic and otherwise. No evidence to support this fear is available – simple logic would state that these countries are generally too small to have a significant impact, whether negative or positive on Europe in general, at a larger scale. Positive Economic Impact of Expansion What then are the positive economic impacts that common citizens seem unable to understand? The positive economic impact for member countries is obvious, but less obvious is the economic benefit the European Union gets in return. As a result, to a common observer these countries seem to benefit from others without giving back their due share of economic benefit. For example, the most obvious economic benefit to accession countries is gaining access to free trade within the European market. Not only does this access allow them to expand their economy in terms of monetary benefit, with easier markets to target and provide for, but it also allows them exposure to newer technologies and markets that they can then integrate into the products they manufacture or provide. What many fail to realize however is that these same products are then marketed to countries outside the EU which can result in greater international trade opportunity, ultimately benefiting the country’s economic state in general, and by extension benefiting the EU. Accession countries can also look to gain economic benefit from the labor benefits that the EU offers. Countries with more developed economies have the need for greater amounts of labor. This labor is also better compensated for their work, in terms of monetary fulfillment and otherwise. As a result, citizens in countries with lower economies seek work in those with faster economies. Although this is seen as negative by resident citizens on the receiving end of this immigration, an alternative perspective can be from the countries the labor is migrating from. Naturally, as more labor positions are left empty, newer employees will fill them. This will create a labor flow cycle, with the unemployed gaining employment, and the employed gaining better employment. It would also help to examine the economic impact existing expansion has had on the European Union, as practical case evidence of the effectiveness or lack thereof in terms of economic development. In 2004, Hungary, The Czech Republic, Cyprus, Estonia, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia were inducted as members of the European Union. According to the European Commission, Bureau of European Policy Advisors in their 2006 report, certain new members, such as Hungary or the Czech countries were already trading heavily with the central European countries – or pre-existing members of the EU before they were inducted into the council, far more than the countries were trading within themselves. This would mean that with trade barriers removed between these countries, preexisting countries would benefit more than the newer members had (Barysch, 2003). The same report also showed that economies for newer members significantly increased, as expected, but surprisingly more so than older members – showing a GDP percentage increase of 3.8 and 3.5 percent respectively. Generally speaking, considering surveyed evidence and drawn reports newer members have very little impact on older members but any impact that they do have, whether in terms of economy or politics, it is more positive than negative. Inversely, older members have a significantly strong impact on newer members, again of a positive nature. Also, according to Wallace and Wallace (2000), this impact is inevitable, whether with or without providing formal membership into the European Union. Trade is ongoing between all European countries, whether in terms of commodities or labor. As a result, one can say that any statistical results shown, positive or negative, are likely to take place regardless. It would be beneficial in such a scenario to at least create positive impact where possible, and minimize any resulting negative impact that doing so may have. Creating a Positive Sense of Acceptance towards Expansion All arguments considered, one can logically conclude that should the economic and political stability of a country be ensured and satisfactorily expanded before it is considered for inclusion in the EU, the process is likely to have fewer negative outcomes. Naturally, a country that is economically stable will be less of an economic burden and more of an economic aid to the council. Political stability of a country independent of the EU is also likely to contribute towards its peaceful integration within the EU. In fact, not only will doing so contribute towards a positive sense of expansion or integration, but failure to do so might result in negative implications of a similar magnitude, compromising the structure and impact of the EU not only independently but in terms of global standing. To create a positive acceptance towards economic arguments that support expansion, a number of approaches can be adopted. To start, countries against the expansion must be informed of the benefits expansion might have to offer, not only in terms of economy but also in terms of politics and united agenda. Since the main argument against expansion seems to be focused on economic disparity, the first fear that needs to be assuaged must hence be the same. Unemployment, citizen welfare support and development funds must be used only on a strongly needed basis, and not as a viable alternative to independent development. The aim of each country should be to gain significant standing in such a position that they may contribute positively towards the betterment of Europe as a whole, rather than as an individual nation, particularly if that benefit arises from the input or expense of other nations. Secondly, reform is required for the system of accession in general. For example, a system of conditional acceptance, followed by a trial period of perhaps five to ten years might be adopted instead of direct accession. The current process of accession involves assessing a country’s current economic status, which if meets a certain criteria is accepted as enough evidence to support membership. Although conditional agreements and treaties are signed, there are no conditions imposed on membership itself, neither are there any clauses that might revoke membership, should a certain economic or political criterion not be met. Once countries are granted conditional membership, they can be subjected to economic trials where growth, impact and significant change can be measured against preset criteria and then membership be reevaluated as needed. In this way, countries that are struggling to repay the privileges membership has provided them might be rewarded for it and vice versa. In similar standing, countries that are providing benefit to lesser advantaged countries would not feel usurped or unfairly treated. Thirdly, instead of considering whether or not newer members can seamlessly integrate into the existing counsel, the focus should be on whether the existing union has the capacity to absorb these newer countries. In other words, the existing members of the European countries should edit their policies in a way where they can maintain and implement them, without having to compromise due to newer members. For example, countries fearing greater risk of unemployment can put in place policies that will secure labor percentage for domestic citizens and certain percentages for immigrants. When enforcing these policies however, care must be taken to ensure that the policies are not over stringent, so much so that they eliminate the existing aims of expansion. Furthermore, the cost of the said policies must also be considered in budgets before the allocation or accession, so that no unexpected costs are incurred. A lack of planning or foresight on part of the existing members should not compromise the possible opportunities of newer countries hoping to gain membership (Fossem, 2000). Conclusion In conclusion, it can be seen that fears regarding expansion are statistically baseless. Membership to the European Union offers great benefit for newly inducted countries, with minimal to no impact on preexisting ones. Fears regarding political or economic unrest are largely unfounded, and so must be eliminated rather than acting upon them. The EU must keep its ultimate aim in mind – the unification and prosperity of all European countries, working together towards the vision of economic and political unity both. Stronger countries must come to the aid of struggling countries, not only out of a sense of kinship but also because it would ultimately serve to benefit them as well. Still, the fears are not entirely baseless as any large move comes with its own risks and trials. To minimize those risks, conditions need to be in place regarding the policies and process of accession. Meanwhile, public temperament must be reformed in order to create a greater sense of the mentioned unity that is the ultimate, original and eventual aim of the European Union. Perhaps the question should not be of the effectiveness or feasibility of expansion itself, but rather regarding the process of enlargement. References 1. Andriessen, F. (1999), Prosperity and Stability in a Wider Europe, Speech at the Atlantic CEO Institute, Czechoslovakia 2. Baldwin, R., Francois, J., Portes, R. (2006) The costs and benefits of eastern enlargement: the impact on the EU and central Europe, in: Economic Policy, Vol. 24, April 2006, pp. 128. 3. Barysh, K. Enlargement two years on: Economic success or political failure?’, Briefing paper for the Confederation of Danish Industries and the Central Organization of Industrial Employees in Denmark, April 2006. (2006) 4. Barysch, K. (2003) ‘Does enlargement matter for the EU economy?’ CER policy brief, May 2003. 5. Carlowitz (2007), Enlarging the EU: How Can The Costs Be Minimized?, InterEconomics March/April 2007 Issue 6. Cowles and Smith (2004), The State of The European Union: Risks, Reform, Resistance and Revival, Vol. 5, Oxford: Oxford University Press 7. Den Broek, V. (2007), ‘On The Road to Enlargement’, Speech in Bucharest 8. Eurobarometer, (2006) ‘Attitudes towards European Union Enlargement’. 9. Eurobarometer, (2006) ‘The future of Europe’, Special survey. 10. European Commission, Bureau of European Policy Advisors and the Directorate-General for Economic and Financial Affairs, (2006) ‘Enlargement, Two Years after - An Economic Success’, European Economy Occasional Papers No 24, May 2006. 11. European Commission, (2006) ‘Report on the functioning of the transitional arrangements set out in the 2003 accession treaty’ 12. European Union Committee (2006), ‘The Further Enlargement of the EU: threat or opportunity?’, 53rd Report Session, House of Lords, 2005-6 13. George, S. (2001), ‘Politics in the European Union’, Oxford University Press: USA. 14. Hagen, J. (1999) ‘The Political Economy of Eastern Enlargement of the EU, Coming To Terms With Accession, London: CEPR, pp. 1-41 15. Hill, C. and Smith, M. (2011), ‘International Relations and The European Union’, Oxford University Press: USA. 16. Krugman, P. (2001) The Move towards Free Trade Zones, in: The Economic Review, Vol. 76, 2001, pp. 5-25. 17. Kohler, W. (2004), ‘Eastern enlargement of the EU: A comprehensive welfare assessment’, HWWA discussion paper 260, 2004. 18. Pusca, A. (2004), ‘European Union: Challenges and Promises of a New Enlargement’, International Debate Education Association 19. Sjursen, H. (2002), ‘Why Expand? The question of legitimacy and Justification in the EU’s enlargement Policy’, JCMS Vol. 40. Number 3, pp.491-513 20. Wallace, H. and Wallace, W. (2000), Policy-Making in The European Union, Oxford University Press: USA. Read More