A UNION FOR THE WHOLE OF EUROPE

by Ernest Wistrich

The Federalist Debate VII N.2, 1994

The Maastricht Treaty establishing the European Union (EU) came into force in November 1993. The next few years will see its progressive implementation, leading up to full economic and monetary union by 1999 at the latest. It also involves some institutional changes and the extension of the Union's competences to several new areas, notably foreign and security policy, home affairs and cooperation in the field of justice.

At the same time the Union is expected to be enlarged in 1995 by up to four new members including Austria, Finland, Norway and Sweden. Other applications for membership have already been lodged by Malta, Cyprus, Turkey and more recently by Hungary and Poland. The latter two countries are the first from Central-East Europe and likely to be followed by applications from the Czech Republic and Slovakia, later from Romania, Bulgaria and Slovenia. Not long after the three Baltic countries, Albania and other successor states of former Yugoslavia will also be knocking on the door. There is thus the prospect that the present Union of twelve will have to plan its enlargement to up to thirty members within the next two or three decades.

Such an enlargement will force a fundamental transformation of the Union to retain the effectiveness of its governing institutions and their capacity to act. It will also have to examine how enlargement to absorb many new countries, whose living standards are less than 30% of the present EU average, could be achieved without destroying its cohesiveness and placing unacceptable financial burdens on existing members.

The Maastricht Treaty envisages a review conference in 1996 at which both the strengthening of its institutions and preparations for its further enlargement will be at the top of the agenda. It is already clear that any continued reliance on consensus or unanimity in reaching decisions within the Council of Ministers is a recipe for stalemate. The larger the number of members the greater the threat to the EU's cohesiveness and indeed its very survival if the right to a veto by single countries were to be retained. Po!ish experience of the anarchy generated by the use of the parliamentary veto in the 17th and 18th centuries is a vivid example of the dangers of relying on unanimity or voluntary consensus, as indeed was the collapse of the League of Nations between the two world wars and the current ineffectiveness of the Conference for Security and Cooperation in Europe (CSCE).

There is growing conviction in most EU countries that the Maastricht Treaty review conference scheduled for 1996 will have to extend majority voting of differing weighting to most areas of Union competence and to giving the European Parliament full powers of codecision over all legislation, as well as making most other EU institutions democralically accountable to it. At the same time, to allay fears of growing centralisation of powers, the review conference will have to define more clearly the division of responsibilities between the Union, its member states and sub-national levels of government. This could best be done by drawing up a written, comprehensible constitution based on federal principles. Such a constitutional settlement would need to incorporate provisions for the enlargement ot the Union and the necessary adaptations in the weighting of voting powers in the Council of Ministers and in the composition of the European Parliament.

Enlargement of the Union to the East

Central-East European Countries (CEECs) which have concluded the so-called Europe Agreements with the EU have been promised full membership in the following declaration by the European Council meeting in Copenhagen in June 1993: "The European Council today agreed that the associated countries in Central and Eastern Europe that so desire shall become members of the European Union. Accession will take place as soon as an associated country is able to assume the obligations of membership by satisfying the economic and political conditions required. Membership requires that the candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities, the existence of a functioning market economy as well as the capacity to cope with the competitive pressure and market forces within the Union. Membership presupposes the candidate's ability to take on the obligations of membership including adherence to the aims of political, economi

c and monetary union. The Union's capacity to absorb new members, while maintaining the momentum of European integration, is also an important consideration in the general interest of both the Union and the candidate countries."

The above statement does not include any firm dates and it heavily qualifies and limits acceptance only to those countries able to adopt all the obligations of membership and to the Union's own capacity to absorb them. Behind these reservations lies the recognition of the immense tasks still facing potential applicants in transforming their economies to make them acceptable to the EU.

The principal problem is that the richest pof the CEECs, the Visegrad 4 (Czech Republic, Hungary, Poland and Slovakia) are only 30% as rich as the EU's current average GDP, whereas most of the other potential applicants are even poorer. Furthermore the share of agriculture as a proportion of their GDP in the Visegrad countries is 2.1/2 times greater than that of the EU's share of its GDP. At present more than 80% of the Union's budget is spent on poor regions and on supporting agriculture. Extending current policies to the Visegrad group would increase annual spending by some 60% to be born almost entirely by existing members. Furthermore extending the Common Agricultural Policy (CAP) to them would boost production within the Union to an unsustainable level. Neither of these would be acceptable. The Budget increase, requiring unanimous agreement under present rules would almost certainly be vetoed by the major net contributor states, whereas a fundamental reform of the CAP, needed to accommodate the new pro

ducers from the East and cut production, would be bitterly resisted by the Union's farmers.

For these reasons there are powerful voices in favour of delaying the enlargement to the East for two or more decades, depending on how quickly the CEEC countries increase their GDP to come closer the EU average and adapt their own agriculture so as to make the cost of enlargement more acceptable. An additional argument against early membership is against the feared massive economic migration from the poorer countries westwards within a Union that allows free movement of people. Indeed previous enlargements have demonstrated that quick membership is difficult to achieve. Spain had to wait some sixteen years after negotiating bilateral free trade with European Community (EC) in industrial products, not unlike the CEEC Europe Agreements, before being accepted into full membership in 1986. It was furthermore granted long transitional periods of up to fifteen years after entry for many of the economic measures required by the Single Market, including freedom of movement for workers. And Spain's GDP was already s

ome 2/3rd of the EU average or double that of the Visegrad group.

Yet political considerations, such as instability and insecurity in the eastern part of the European continent, argue powerfully in favour of the earliest possible absorption of the CEECs within the Union. The uncertainties generated by civil wars, ethnic conflicts and fear of the re-establishment of authoritarian nationalist regimes amongst their neighbours justify the CEEC demand for a definite and early prospect of accession to safeguard their fragile democracies. A firm date would provide those countries with a clear target and timetable for adapting their laws and practices to fulfil the obligations of membership. There is every reason to believe that, apart from their relative poverty and dependence on a large agricultural sector, most CEECs could fulfil the obligations set out in the Copenhagen declaration and also be acceptable to the rest of Union within the course of the next ten years.

How then to square the circle. The Union itself has now accepted the principle that not all countries can move towards full integration at the same pace. Economic and Monetary Union (EMU) envisages progress to its final stage and adoption of a single currency to be open only to those member countries that satisfy the criteria laid down in the Maastricht Treaty. Other members are expected to catch up later. Temporary opt-outs from common policies are also acceptable. A multispeed EU is thus already a reality, provided that all accept the common final aim of economic, monetary and political union.

The answer may lie in a variation from previous practice. All CEEC countries aspiring to EU membership should negotiate an agreement to establish a common free trade zone with the Union which would exclude agriculture and the free movement of people. This could be similar to the European Economic Area (EEA) negotiated with the former EFTA countries. Implementation of full free trade might have to be phased over transitional periods for some of the poorer countries, not yet ready to expose themselves to it. Technical advice and financial assistance to help them transform their economies, build up their infrastructures and achieve rapid growth should be channelled through special funding provided by long-term, low interest loans from the European Investment Bank. The free trade zone is likely, furthermore, to attract much more private investment than that currently flowing into countries that may have only bilateral agreements with the EU, but which are largely insulated from free trade with their CEEC neighbo

urs.

Those countries which, apart from their economic backwardness, can be judged capable of fulfilling other conditions of membership should be accepted into the Union for all purposes except the CAP, cohesion funding and free movement of labour. They would include full participation in foreign and security policies, justice, home affairs, as well as most of the other competences of the European Community, such as the environment, education and training, cultural policy, public health, consumer protection, trans-European networks, tourism etc. Economic relations would be governed by institutions of the free trade zone, similar to those of the EEA. If they satisfied the Maastricht Treaty criteria for monetary unification they could adopt the common currency managed by the European Central Bank. Once a country is judged to have advanced economically to a level which would no longer present the Union with unacceptable costs, a transfer into full membership could take place.

The Union itself would also have to adapt to take account of the prospective economic enlargement by a further reform of the CAP and of its other cohesion policies. Such reforms within the Union are more likely to be acceptable if phased over some ten or more years to coincide with the timetable for the full economic absorption of its CEEC members. Although these proposals introduce new complexities, including substantial derogations and variable speeds of integration, the principle of a Europe advancing to the same common objective would be retained. The new CEEC democracies would be brought into membership at much earlier dates and not left insecure beyond the Union's boundaries.