Committee Reports > List of Committees > Joint > 1994 > Committee on Foreign Affairs > Report - The Enlargement of the European Union

JOINT COMMITTEE ON FOREIGN AFFAIRS

LIST OF MEMBERS

* He resigned from the Dáil on the 19 July 1994

BACKGROUND

Shortly after its establishment in 1993 the Joint Committee on Foreign Affairs agreed that a priority issue for detailed review was the proposed Enlargement of the European Union arising from the applications for membership by Austria, Finland, Norway and Sweden.

The Joint Committee decided to retain the services of Professor Brigid Laffan, Jean Monnet Professor of European Politics at University College Dublin, to assist in its research and deliberations. The Joint Committee is indebted to Professor Laffan for her work on the draft report and wishes to place on record its appreciation for the quality of the material and depth of knowledge on this important subject which was displayed by the consultant during the preparation of the report.

The Joint Committee would also like to thank Mr. Ted Barrington and Mr. Noel Fahy, Assistant Secretaries in the Department of Foreign Affairs and their officials, who assisted by way of oral briefings and written submissions.

The deliberations of the Joint Committee were also much enhanced by contributions made by the Institute of European Affairs, as well as the Ambassadors and parliamentary delegations from a number of applicant countries.

The report below sets out the background to the proposed Enlargement of the European Union. The Joint Committee believes that the increase in the E.U. from 12 to 16 Members (on the accession of Austria, Finland, Norway and Sweden) will be greatly beneficial to Europe as a whole and will do much to deepen and strengthen the Union in the months and years ahead.

The Joint Committee also considered in detail the further enlargement of the European Union, with reference to Central and Eastern Europe, as well as a number of Mediterranean states. Assessment of a Central and Eastern enlargement, in particular, requires a focus on its timing, institutional consequences and policy implications. The nature and extent of the transition process in Central and Eastern Europe will have a bearing on the process of enlargement. The Joint Committee also notes that a Central and Eastern enlargement would have significant implications for the Common Agricultural Policy, Cohesion policy and the EU public finances (See paragraphs 9.1.3 - 9.1.4), and the future development of the Common Foreign and Security Policy.

The Joint Committee would emphasise that the proposed present phase of Enlargement of the Union should be seen as a natural evolution of the E.U. as a whole; Ireland has been a committed and responsible Member from the outset and, in that context, the Joint Committee wishes to emphasise that the way forward is via a united approach, along a single path. Any suggestion of a “two speed” policy would be, not only ultimately divisive, but highly undesirable at this stage in the development of the Union.

In publishing its report the Joint Committee strongly recommends that its contents be debated in the Dáil and Seanad at an early date.

1. Introduction

1. Since the mid 1980s the process of European integration has undergone a profound transformation. First, there was a resurgence of integration among the Twelve member states with the agreement to complete the internal market by 1992 and the ratification of the Single European Act, the first major modification of the Rome Treaties. The 1992 programme, designed to enhance Western Europe’s competitiveness, implied changes to the Community’s institutional balance and a heavy legislative programme. The dynamic effects of market integration had implications for different regions and sectors of the European economy. The success of the 1992 programme led to the establishment of the Delors Committee on Economic and Monetary Union because it was acknowledged that a genuine common market required a single currency. By 1989 the Community had an ambitious programme for European integration and an overcrowded internal agenda.

1.2. In 1989, the collapse of communism and the Soviet Union’s retreat from empire radically altered Europe’s geo-politics. The Iron Curtain which had served to insulate Western Europe from events in the east, was gone. Between 1945 and 1989, the two halves of Europe developed different systems of economic and political integration, under opposing security regimes. The opening of the Berlin Wall brought with it rapid German unification. Germany became once again a power in the middle of Europe and was faced with enormous adjustments, both politically and economically. The states of Eastern and Central Europe were faced with the need to overcome the legacy of communism and the challenge of establishing viable market economies and democracies. The Soviet Union itself could not survive as a unitary state. A large number of new states emerged in the former USSR, although Russia is clearly the preeminent power in this space. Fragmentation also characterised Yugoslavia which descended into civil war, while Czechoslovakia divided in a peaceful manner.

1.3 The transformation of Europe and the re-ordering of the Continent disturbed the existing West European order in a very real sense. Although the states in the former Soviet bloc face the most demanding challenges, Western Europe and West European organisations must also adapt to the post-cold war world. Europe is faced with the challenge of establishing a new order to allow for political, economic and security cooperation for the Continent as a whole. Gone are the certainties and shared assumptions of a divided Europe. In this rapidly changing and dynamic environment, the European Community attempted to deepen integration by negotiating the Treaty on European Union (Maastricht Treaty). The purpose of the TEU was to establish the framework for integration for the first half of the 1990s. The Treaty, constructed on the basis of three pillars, involved modifications to the Rome Treaties, a framework for Economic and Monetary Union (EMU), Common Foreign and Security Policy, and co-operation in Justice and Home Affairs. The Treaty faced a particularly turbulent ratification process when, in June 1992, the Danish electorate voted against it. This was followed by a narrow ‘yes’ in a French referendum, a tardy and politically damaging passage in the House of Commons, and a legal challenge in Germany. When the TEU finally entered into force in November 1993, its chapter on EMU had been undermined by a lengthy currency crisis that ended in the virtual collapse of the Exchange Rate Mechanism (ERM). Moreover, the ratification process had brought the issue of political accountability sharply into focus. The West European publics were not necessarily convinced of the need to deepen integration. The Maastricht ratification crisis added to the dramatic changes in the continent and undermined confidence in integration. Economic recession heightened tensions as Germany came to terms with the cost of unification and unemployment rose to 18 million in the EU.

1.4 During this turbulent period for the EU and Europe in general, the question of enlargement emerges as one of the most pressing and difficult issues on the EU agenda An important study on enlargement opens with the categorical statement that ‘the EC is going to be enlarged; it is an illusion to believe any longer that there is anything optional about responding affirmatively to at least some of the pressing candidatures, both declared and potential’¹. The Union is attempting to deepen the level of integration, while at the same time, deal with the demands of its European neighbours for membership. The prospect of a greatly increased membership to include the European Free Trade Association (EFTA) states, the Visegrad group, Slovenia, Bulgaria, Romania, the Baltic states, the southern European states and potentially even some of the newly independent states of the Commonwealth of Independent States (CIS) raises major economic political and institutional issues, both for the Union and the potential entrants. This process of enlargement is fundamentally different from previous enlargements because of the number of potential entrants and the post-communist transition process. The issue of enlargement is often posited in terms of a deepening or widening of the EU. In fact, the Union has no such clear-cut choice. Both deepening and widening will feature in EU politics in the 1990s. The Union must deepen if it is to widen successfully and it cannot restrict its membership in the long term. Although the Union is built on the Franco-German relationship and the ‘Inner Six’, it was never intended as an exclusive club and has already widened three times in the past.

¹ Miahalsiki A. Wallace H., The European Community: The Challenge of Enlargement, London, 1992.

2. The Conditions for Membership

2.1 The Conclusions of the Maastricht European Council (December 1991) set out the parameters for the EFTA enlargement negotiations. First, the Council agreed to open the next round of accession negotiations once a new basis for financing the EU was in place. This meant that agreement on the Delors II package was necessary before talks with the EFTA states could begin. Second, ratification of the TEU had to be assured. Third, the Council asked the Commission to prepare a report on enlargement for the Lisbon European Council (June 1992). The Lisbon Report analysed the criteria and conditions for membership of the Union and is a key document on Commission thinking. It was later amplified by the conclusions of a number of European Council meetings. (See 6.4 on issues raised by a Central/East European enlargement.)

2.2 Article 237 of the Rome Treaty simply states that ‘any European state can apply to become a member of the EEC’ but does not define Europe’s geographical limits. (Europe’s geographical limits are difficult to define because both Turkey and Russia merge with other continents.) The Maastricht Treaty emphasises that the Union consists of democracies and that the Union shall respect fundamental human rights (Article F, TEU). The Commission report, “Europe and the Challenge of Enlargement” (1992), underlines what it considers to be the three essential attributes of membership:

•European Identity: geographical, historical and cultural elements.

•A functioning democracy

•Respect for Human Rights (Commission Report, p. 11)

The report specified a number of other conditions that must be met. Each applicant must accept the Community’s ‘Acquis communautaire’, the bundle of obligations arising from existing Treaties, international agreements and laws. The ‘acquis’ runs to some 12,000 pages of law at present. New members must not only accept these laws but must be capable of implementing and enforcing them. The Commission report clearly states that the obligations of membership ‘presuppose a functioning and competitive market economy, and an adequate legal and administrative framework in the public and private sector’.² Although the Union has attempted to elaborate on the criteria for membership, a political process and political judgement will ultimately determine how important the criteria are. An eastwards enlargement of the Union will test these criteria over the coming years.

2.3 Acceptance of the ‘acquis politique’, a term used informally to describe co-operation in foreign policy matters, is an additional criteria of membership. This implies acceptance of what has been achieved in European Political Co-operation (EPC) and the second pillar of Maastricht on the Common Foreign and Security Policy (CFSP). The report, in a guarded comment on neutrality, states that ’An applicant country whose constitutional status, or stance in international affairs, renders it unable to pursue the project on which the other members are embarked could not satisfactorily be integrated into the Union.’ (Commission Report, p. 11). Accession to the Union implies that a state accepts that the EU is an evolving entity with an underlying political goal. Hence, acceptance of the existing treaties is not enough.

²EU Commission, Europe and the Challenge of Enlargement, Bulletin of the EC, 3/92

3. The Candidate Countries

3.1 Since 1987 ten states have formally applied to join the European Union. The longest standing application is the Turkish one, which dates from 1987. Turkey was followed by Austria (1989), Cyprus (1990), Malta (1990), Sweden (1991), Finland (1992), Switzerland (1992), Norway (1992), Hungary (1994) and Poland (1994). The Council of Europe, which consists of European states that are committed to human rights and the rule of law, has 27 members. There are many other states outside the Council to date. The potential pool of candidates for EU membership is vast. A Union of some 20-25 states is possible. Future enlargements of the EU are qualitatively different from those in the past. The jump from nine to 12 members is considerably less problematic than an increase to 25. The potential applicants are diverse, with varying levels of economic development and political experience. A number of quite small states are in the accession queue.

3.2 At present, it is possible to distinguish between three groups of potential members. First, there are the EFTA states which have completed the accession negotiations. The second group includes the states of Central and Eastern Europe which have concluded Europe Agreements with the EU - Poland, Hungary, the Czech Republic, Slovak Republic, Romania and Bulgaria. Slovenia and the Baltic states could also be regarded as part of this group as the EU is committed to negotiating Europe Agreements with these countries in the near future. The third group consists of the Mediterranean states that have applications on the table - Turkey, Malta and Cyprus. The other potential members have neither made formal requests for membership nor are likely to in the near future.

3.3 The procedures for processing applications for membership are relatively straightforward. The applicant communicates a request for membership to the Council of Ministers, which in turn requests an Opinion from the Commission on the application. Then the Council, acting on the basis of unanimity, decides whether or not to open negotiations. Following the Single European Act (SEA), the European Parliament must give its assent to each Treaty of Accession. This gives the EP a critical role in future enlargements. The Parliament will attempt to link internal institutional development with enlargement. Negotiations are conducted between the individual applicants and the Union. The Presidency of the Council, the Commission and representatives of the member states conduct the negotiations. Parallel negotiations take place when a number of states have applied to join.

3.4 During 1992 a strategy for managing the next wave of enlargements emerged in the EC. The Union opted for a phased approach, beginning with the EFTA states. The member states were prepared to open negotiations with EFTA applicants in 1993 with a view to accession on January 1, 1995. The timing of subsequent enlargements is highly speculative at present. To date the Commission had published Opinions on Turkey (1989), Austria, Sweden and Finland (1992), and Norway, Cyprus and Malta (1993). Following the non-ratification of the EEA Treaty, the Swiss Government suspended its application. See Table 1.

Table 1: Current Applications for EU Membership.

***** Accession negotiations finalised March 1994; European Parliament agreed in May 1994; Austria voted in favour of membership in a referendum.

4. The EFTA enlargement: A European Union of 16

4.1 In 1960 the Stockholm Convention established the European Free Trade Association (EFTA) consisting of a group of states that felt unable to participate in the ‘continental mode’ of integration. EFTA was a minimalist intergovernmental organisation with a light institutional structure. It was designed to allow its members benefit from free trade without sacrificing national sovereignty. Relations with the EC have always dominated EFTA because of trade dependency on the EC markets. In 1961, when the UK decided to apply for membership, Austria, Sweden and Switzerland wanted association status because of their neutrality. President De Gaulle’s ‘vetoes’ of UK membership put the issue into abeyance until after the Hague Summit in 1969. In 1973 EFTA lost two of this members (UK, Denmark), including its largest one. In 1970, the Commission proposed that the remaining EFTA states should be offered free trade agreements with the Community. By 1977, a pan-West European free trade area became a reality. A joint EC-EFTA ministerial meeting in April 1984 was marked by a willingness to broaden and deepen co-operation between the two West European organisations. Hence, there has been a gradual deepening of relations between the two groups.

4.2 Renewed political dynamism in the EC and especially the commitment to the internal market challenged the traditional integration policies of the EFTA states. Austria was the first EFTA state to apply for membership in 1989. In an attempt to stave off potential applicants, the President of the Commission, Mr. Jacques Delors, offered the concept of a European Economic Area, as a form of partnership short of full membership. Its purpose was to offer all a ‘new, more structured partnership with common decision-making and administrative institutions’. The EEA would allow the EFTA states participate in the single market without full membership. In economic terms the EFTA states are as integrated in the EC market as the member states themselves. Approximately 60 percent of EFTA trade is with the EC and a further 13 percent with other EFTA states; almost three-quarters of their trade is in the EEA area. The negotiations on the EEA proved to be far more difficult than anticipated and touched on many sensitive issues, particularly in relation to decision-making and judicial enforcement. The EEA agreement was concluded in 1992, by which time it was seen as a ‘transitional arrangement’ on the road to full membership. Through the Agreement, about two-thirds of the ‘acquis communautaire’ is already incorporated into the national laws of the EFTA states covering such areas as the free movement of goods, services, capital and persons.

4.3 The Community’s determination that the autonomy of its decision-making must be respected left the EFTA states with the possibility of influencing EC decisions but not making them. This convinced the EFTA states that a ‘half-way’ house was of little benefit and that they would have to become full members to exert control over laws that would bind them. The decision to apply for full membership marked a major reversal in the traditional policies of these countries towards European co-operation and integration. The experience of the EEA suggests that the EU cannot buy off potential members with something short of full membership.

4.4 Of the pool of potential members, the EFTA states pose the least problems of adjustment. They are all highly industrialised, technologically advanced and wealthy liberal democracies whose standards of living equate to the richer states in the Community. The Scandinavian states and Austria have strong corporatist traditions governing relations between the social partners and the state. Social democratic norms are deeply embedded in their societies; the Scandinavian welfare model is one of the most generous in Europe. The Nordic model has been lauded and envied as a model of social and economic progress. A concern for sustainable development, evident in stringent environmental standards, is also apparent in these societies. Women’s rights and female participation in politics and the public sphere is more advanced than in most West European states. The EFTA states accord a special place to agriculture in their economic life and use both agricultural policy and regional policy to protect those vast areas of their countries that are sparsely populated.

4.5 Paradoxically the decision to apply for membership was motivated in part by economic crisis. The EFTA states, particularly the Scandinavian states, found it increasingly difficult to maintain high employment and a large public sector. Unemployment began to increase after 1990 and the Swedish and the Norwegian Krone were forced to float in 1992. Real wages had become too high as wages kept rising while labour productivity declined. EC membership became attractive to Sweden when Swedish multinationals began to invest heavily in the Community, thereby undermining the economy’s productive base. The Finnish economy was faced with a major problem of adjustment when its preferential trading arrangements with the former USSR broke down.

5. The Negotiations

5.1 The Commission report on enlargement concluded that the accession of EFTA states ‘should not pose insuperable problems of an economic nature, and indeed should strengthen the Community in a number of ways’. (Commission Report, p.32) The report did, however, raise the issue of neutrality and its compatibility with the CFSP as a concern. The Lisbon report and the Commission Opinions on the various applications all pointed to a ‘fast track’ approach to this enlargement. The Lisbon European Council asserted that ‘the EEA Agreement has paved the way for opening enlargement negotiations with a view to an early conclusion with EFTA countries seeking membership of the European Union’. The Commission Opinions on all four applicants were very positive in tone, while highlighting sensitive issues.

5.2 Negotiations with Austria, Sweden and Finland opened on the first of February 1993 with Norway joining the negotiations in April. The negotiations were divided into 29 chapters covering all aspects of the EU. By November 1993, 11 chapters were concluded with Sweden, 10 with Finland, 9 with Austria and 7 with Norway. See Table 2.

Table 2: Negotiating Chapters for the EFTA Enlargement.

This left a large number of dossiers to be completed before the deadline of the first of March, 1994. In addition to the internal market legislation, full membership implied adjusting to:

* the common agricultural policy

*the common fisheries policy

*common policies vis-a-vis third countries

*binding economic and monetary policy co-operation and perhaps EMU

*harmonisation of VAT and excise taxes

*EU regional policy

*Co-operation in pillars 2 and 3 of the TEU

The sensitive and difficult dossiers for individual countries emerged quickly in the negotiations and dominated the final stages of the discussions. See Table 3.

Table 3 : Sensitive Issues in the EFTA Negotiations.

5.3 Policy Issues (Raised by the EFTA Enlargement)

5.3.1 Agriculture and Regional Policy: Agriculture in the applicant states faces extreme conditions because of mountain and ‘Arctic’ conditions. Traditionally, agriculture has been supported with generous subsidies, higher than those in the CAP. The purpose of large subsidies was to maintain communities in sparsely populated areas. Prior to the opening of accession negotiations, the Swedish and Austrian governments began the process of adjusting their support mechanisms. See Table 4 for figures on agricultural support.

Table 4. Support for Agriculture in the EFTA states. (Net Percentage PSE*)

Source: Foreign Affairs Report, March 1993].

5.3.2 The EFTA enlargement increases the land area of the EU by 1110 million hectares, an increase of some 47%. However, agricultural production in the accession countries is less than 10% of the current EU production in volume terms because of the geographic conditions in large areas of the applicant states. That said, the accession states are self-sufficient in meat and dairy products. The Austrian and Swedish Governments started to adjust their support mechanisms in 1991/92. In Austria, quotas operate for many products, whereas in Sweden market support measures have been replaced with direct income support and per hectare payments. During the negotiations, the EU insisted that there should be an immediate alignment of agricultural prices in the four countries from January 1, 1995. This was necessary to avoid border controls which have been abolished as part of the internal market programme. Alignment of prices implies significant prices reductions in three of the four countries. Sweden’s agricultural reform meant that its prices are at or below EU prices. In order to facilitate the difficult adaptation to EU prices, the applicants are allowed to pay temporary direct payments to farmers for a transitional period. As part of an agri-budgetary bargain, the Union agreed to provide a financial contribution to these costs over a four year period. Long-term national aids are envisaged for agriculture in the arctic region.

5.3.3 During the accession negotiations, regional policy became embroiled in the negotiations on agriculture. In fact, agricultural policy in these countries has important regional policy goals. As part of the agreement, a new objective six category has been established as part of the Structural Funds. This category is of a temporary nature and will only exist until 1999. The measure is intended for areas with a low population density of less than 8 inhabitants per square kilometre. This was primarily designed for the remote Nordic regions. The Austrian region of Burgenland has been added to the list of objective one regions. For the period, 1995-99, 1,109 billion ECUs have been allocated for expenditure in objective six regions and a further 190 million ECUs in Austria. The applicants will also benefit from other Structural Fund measures under objectives 2 to 5b.

5.3.4 The Union Budget: The prospect that the EFTA states would be net contributors to the Union budget has been seen as one of the attractions of an EFTA enlargement. Already under the EEA Agreement, the EFTA states had agreed to pay for their participation in EC programmes and to provide assistance for structural adjustment in the Union’s poorer regions. At the end of the accession negotiations, the budgetary issue became embroiled in the debate on agriculture and regional policy. The successful conclusion of the negotiations required an agri/regional-budgetary package. The budgetary provisions in the accession agreements allow for budgetary compensation [to the EFTA states] of 2,966 billion ECU over the period 1995-98 and a further contribution towards the cost of adjusting to the CAP. The special agri-budgetary commitments [budgetary compensation and CAP adjustment] total some 3.6 billion ECUs. This was necessary in order to phase-in the budgetary consequences of membership. The Commission estimates that assuming that all four applicants join, the net gain to the EU budget will be 6,500 million ECU during the period 1995-99. This does not amount to a sizeable increase as the 1994 budget amounts to 70,000 million ECU. It is anticipated that Finland will be a net beneficiary after 1999.

5.3.5 Fisheries: This was by far most sensitive dossier in the negotiations with Norway. Fisheries was the main reason for the Norwegian ‘No’ in 1972. The most difficult fisheries issues were access by other states to Norwegian waters, market access for Norwegian products and management of waters above the 62 nd. parallel. Spain and Portugal pressed their case strongly for further access to Norwegian waters above the 62 nd. parallel. The negotiations with Norway on this matter were delayed for a week although agreement had been reached with the other applicants. As the negotiations drew to a close, Norway made concessions in the form of tonnage (12,600 tons in 1995 rising to 14,100 tons in 1997) and the Member States agreed to complete their internal negotiations on Spain and Portugal’s involvement in the Common Fisheries Policy (relative to which decisions had been required by December 1993) and on the regime to apply after December 1995. This meant that the CFP would apply to Spain and Portugal more quickly than anticipated in their Treaties of Accession. In addition, the Union will seek to negotiate fishing rights with Russia for Spain and Portugal. The Norwegian negotiators adopted a very firm approach to the fisheries negotiations.

5.3.6 Environment: All of the applicant states have high environmental standards and will strengthen those voices in the EU seeking an upgrading of environmental legislation in the EU. During the negotiations, transit through Austria’s Alpine regions, one of the main transport arteries in Europe, proved difficult. Austria wanted to maintain existing controls for a period of nine years. The Union partners were willing to endorse a transitional arrangement until 1998 during which time the issue will be reviewed. A further transitional arrangement until 2001 is possible, if in 1998 there is not unanimous agreement in the Council. Before 2001, the Commission in co-operation with the European Environment Agency will undertake a scientific study of the degree to which the objective of the Transit Agreement (reduction to 60% of the level of pollution from lorries of more than 7,5 tonnes) had been achieved.

5.4 Common Foreign and Security Policy

5.4.1 Traditionally, Swedish, Austrian and Finnish neutrality was seen as a major impediment to their membership of the Union. Neutrality was more than a security policy; it symbolised national identity, their foreign policy orientation and freedom from bloc confrontation. Neutrality is an important value in their political culture. See Table 5 for background to the neutrality policies of the applicants.

Table 5: Neutrality Policies of Austria, Sweden and Finland.

5.4.2 The collapse of communism in 1989 and the ending of the East/West divide fundamentally altered the security environment of Europe and particularly of the neutrals. In the post cold war environment, all European states are reassessing their security options and are responding to the emergence of a new security order in Europe. The Swedish Government, in the Foreign Policy Statement contained in the preamble to the 1991/1992 Budget Bill, stated that’ the term “policy of neutrality” can no longer be employed adequately and comprehensively to describe the foreign and security policy which we wish to pursue within a European framework’.³ (See paragraph 5.4.4).

5.4.3 For the Neutrals, the decision to apply for EC membership implied a reassessment of their policies on foreign policy co-operation and Pillar Two of the Treaty on European Union. The TEU in Article B sets out the ambitious objective to assert its identity on the international scene, in particular through the implementation of a common foreign and security policy including the eventual framing of a common defence policy, which might in time lead to a common defence (Treaty on European Union)

The reality of the Union’s common foreign and security policy falls well short of the coherence and global nature of the commitment outlined in Article B. That said, the objective of speaking and acting with one voice is now part of the ‘acquis politique’ and the commitment to security and defence places this issue on the EU agenda in a more explicit manner than heretofore. Moreover, the decision to convene an intergovernmental conference (IGC) in 1996 raises the stakes for the applicants. At the opening of the accession negotiations in February 1993, the Danish President of the Council set out the principles that would govern enlargement and Pillar Two. The principles were that:

³Swedish Foreign Ministry, A Historic Choice, Official Report on Foreign and Security Policy, 1994.

- enlargement should strengthen the internal coherence of the union and its capacity to act effectively in foreign and security policy.

- applicants must from the time of their accession be ready and able to participate fully and actively in the CFSP as defined in the TEU

- applicants must take on in their entirety and without reservations all margin-left: 6ex; the objectives of the Treaty, the provisions of its Title V and the relevant declarations attached to it.

- applicants should be ready and able to support the specific policies of the Union in force at the time of their accession (Helveg Pertersen, 1993)

In effect, these principles meant that the candidate states had to accept Pillar Two without reservations and in their entirety. At a Foreign Affairs meeting between the EU and the candidate countries in December 1993, it was noted that foreign and security policy was not a problem area for the enlargement negotiations. The meeting adopted a joint declaration on the matter which has been annexed to the Accession Treaty. The Joint Declaration notes the acceptance by the acceding countries of the ‘acquis’. It also notes their readiness to take on the objectives of the CFSP and the understanding that on accession their national legal frameworks will be compatible with the CFSP.

5.4.4 Austria, Sweden and Finland are in the process of re-defining their security policies and their concept of neutrality. Given the state of flux in Europe and the evolutionary nature of the new security order, we can anticipate a continuing process of adjustment in the applicant states. All three applicants stated categorically that they would participate fully in Pillar Two of the Union from membership and confirmed their unconditional commitment to the TEU before the accession negotiations got underway. However, non-participation in military alliances remains part of the security policies of Austria, Sweden and Finland. This is best illustrated by a quote from the Finnish Foreign Minister, M. Pertti Salolainen, at the opening of the accession negotiations in February 1993:

In the post-Cold-War Europe, the core of the Finnish policy of neutrality consists of military non-alliance and an independent defence, which in our view is a positive elements in the overall situation in Northern Europe

The strategy of the applicants is to accept the ‘acquis politique’ as its exists at present and to assess their approach to the future development of Pillar Two during the IGC. Policy will be moulded by developments in their regions and their experience of participation in Pillar Two from 1995. Finland and Sweden are particularly concerned with developments in Russia and the Baltic region. Since the break-up of the USSR, domestic politics in Russia have been characterised by considerable volatility and crisis. The success of the ultra-nationalist, Mr. Zhirinovsky, in the 1993 elections raises the spectre of expansionist military policies in the future directed against the ‘near abroad’, notably the Ukraine and the Baltic states. Such developments would have major implications for stability and security in the Nordic region and might lead the Nordic neutrals to seek alignment as a form of deterrence.

5.4.5 As for developments in Pillar Two, the applicants have adopted a ‘wait and see’ approach similar to many of the existing member states, including Ireland, which have not as yet defined in a very precise way what they might agree to as part of a ’common defence policy’ and a ’common defence’. Issues that might fall under a common defence policy and a common defence have been explored in a 1994 Swedish report on CFSP. See Table 6.

Table 6: Possible Coverage of an EU common defence policy and a common defence.

Source: Swedish Report on CFSP, 1994.

The threshold between participation in a common defence policy /common defence and non-participation in military alliances seems to hinge around the issue of mutual defence guarantees. The outcome of the 1996 deliberations with regard to the Western European Union (WEU) are critical because the Brussels Treaty contains a very strong mutual defence guarantee under article 5 which says that, if one member is the subject of an armed attack in Europe, the other members will give it all of the military and other assistance within their power. There is as yet considerable uncertainty about the eventual shape of Europe’s security order. The outcome will depend on the evolving role of the UN, NATO, the North Atlantic Co-operation Council, the WEU, and the CSCE.

5.5 Institutions

5.5.1 Political culture in the EFTA states, particularly in the Nordic states, is one of strong parliamentary scrutiny of executive power and open government. There is extensive public access to official records in the Nordic states and a tradition of transparency in government. The accession of the applicants will strengthen EU policies on openness, transparency and subsidiarity. The new members will seek to address the problems of democracy in the EU.

5.5.2 Every enlargement of the Union has implications for the EU institutions because representation in the EU system is based on representation by member states. Each new member must be given adequate representation in the European Parliament, the Courts, the Council of Ministers, the Commission and other EU organs. In addition to formal representation, the nationals from the new member states must find posts in EU institutions. At the Lisbon European Council, it was decided that the EFTA enlargement could be accommodated without major institutional adaptation. In other words, the sensitive and difficult issues have been put off until the 1996 review IGC. See Table 7.

Table 7: EU institutions Before and After the EFTA Enlargement

The applicant states will be represented by one Commissioner each, one member of the Courts and proportional representation in the Parliament, the Economic and Social Committee and the Committee of the regions. In the EP, Sweden will have 21 MEPs, Austria 20, Finland 16 and Norway 15. In the Committees, Sweden and Austria will have 11 members and Finland and Norway 9 each. Hence there is a pro rata increase in the size of all EU institutions.

5.5.3 The main challenge facing the EU is to design an institutional system that is both effective and legitimate. The system must have sufficient political authority to enable it carry out the tasks contained in the treaties in a manner that is compatible with the democratic traditions of the member states. The recent referendums on the TEU highlighted a gap between those involved in EU business on a day to day basis and the public at large. The EU is perceived as distant and beyond democratic accountability. The question of capacity is central to any discussion of enlargement. How can the Union maintain a capacity to act, to agree to norms and standards with a greatly increased membership? Each new member adds another voice to Council negotiations and further complicates the bargaining process. The EFTA enlargement adds four new official languages to the EU in addition to the existing nine. This will impose a considerable burden on the translation and interpretation services of its institutions. It would seem inevitable that the Union will reduce the number of working hours in the future. In the Council of Ministers, 16 members, the Presidency and the Commission with a hypothetical 10 minutes each for a tour de table will take three hours before substantive negotiations can begin on a line by line and article by article analysis of the texts. The frequency of the Presidency for the individual member states will automatically be reduced from once every six years to once every eight.

5.5.4: Although it had been agreed that this enlargement could go ahead with mechanical adjustments to the institutional balance, the conflict about the size of the blocking minority vote, which threatened the enlargement time-table, brought the institutional issue sharply into focus. When the substantive negotiations with the EFTA states had been completed, the member states had great difficulty finalising chapter 28 on institutional matters. The existing blocking minority for twelve member states was 23 votes out of a total of 76. It had been assumed that there would be a mechanical adjustment of this figure (27 votes out of 90 votes) to ensure that the threshold for a blocking minority increased in line with the increased number of votes and member states. The major change in the new proposal was to increase the number of countries needed for a blocking minority from two large and one small state to two large and two small or two large and a medium sized state. The majority of the member states favoured a mechanical adjustment. The United Kingdom and Spain opposed the adjustment and wanted to retain the blocking minority at 23. A very serious conflict for the Union ensued which threatened enlargement and strengthened those opposing membership in the applicant states. The UK wanted to protect the positions of the larger member states in the Union and Spain was concerned about the North/South balance in the Union. The European Parliament made it clear that it would refuse to give its Assent to the Accession Treaties unless the minority was raised to 27. The conflict was finally resolved at an informal Foreign Affairs Council in Ioannina, in Greece. The compromise was that the qualified majority should be 64 votes out of 90 and the blocking minority would increase to 27 in the enlarged community. However, if there was a blocking minority falling between 23 votes and 26 votes, no decision would be taken for a ’reasonable’ period during which time the Commission and the Council Presidency would try to reach consensus between the Member States. Any member state can raise the issue as to whether the delay continues to be ‘reasonable’ and then the Council is free to take a majority decision. In other words, the ‘reasonable’ period does not amount to an indefinite period nor a return to the Luxembourg compromise. This conflict on voting and the outcome of the impasse raises the prospect of further conflicts of this nature in future.

5.6 Public Opinion in the Applicants

5.6.1 Sweden, Austria, Finland and Norway remained outside the core regional organisation in Western Europe for a variety of political reasons. The institutional system they adopted in EFTA was intergovernmental in ethos and lacked the supranational traits of the ’Community Method’. These countries are used to a high degree of autonomy in decision-making. Protection of sovereignty is accorded an important place in their state traditions. It is clear from the Danish experience, the only Nordic State at present in the EU, that the Union is perceived largely in economic terms and that there is little official or public enthusiasm for a deepening of integration and a strengthening of political union. Public opinion in the applicant states is divided on the issue of EU membership. There is a sizeable ’no’ vote in all states. For constitutional and political reasons the issue of membership must be put to a referendum in all states. Hence the people of these states will ultimately decide on membership. The governments are embarking on a wide-ranging campaign to explain how the accession terms are favourable to the respective countries. Undoubtedly, the Maastricht ratification crisis, the collapse of the ERM and the ineffectual response to the break-up of Yugoslavia have contributed to public scepticism about the effectiveness of the EU analysis of opinion polls taken in Finland highlight the wide gap that exists between those who approve of EU membership and those who oppose it. Their perceptions of the Community are very different. Supporters of membership think that the ‘Community is strengthening Europe’s position in global competition, facilitating interaction between different countries’ citizens, as well as also strengthening peace within Europe. The EC is seen as part of the inevitable development of global integration’. For opponents of membership the EC favours the strong, serves the economy rather than the ordinary man, and threatens the national identity of small countries. It is bureaucratic, and only works in good times, while quarrelling in bad times. It puts too much emphasis on economic values, ignores social values and excessively standardises the life and culture of different countries’. (Finnish EC Opinion: Autumn 1993) The Public opinion polls show that the issue is a divisive one for the public in those states. See Table 8.

Table 8: Opinion in the Applicant States on EU Membership

Source: Prepared from Eurobarometer Surveys taken at different times. Norway (Feb 1994), Sweden (Jan 1994), Austria (Feb 1994) and Finland (Jan 1994) *[Austria voted in favour of membership.].

The most consistent and strongest ‘no’ vote is being registered in Norway where in 1972 an EC referendum was defeated by 54% against and 46% for membership of the EC. Since the negotiations have drawn to a close support for membership is strengthening somewhat although there is still sizeable opposition. The strongest ‘yes’ vote in the Nordic states is being recorded in Finland and this may well influence the debate in the other Nordic states. Sweden is the most difficult one to read at the moment as opposition to membership seems to have strengthened since the conclusion of the accession negotiations. Despite the fact that opinion appeared deeply divided in Austria in the run-up to the June referendum, there was a strong vote in favour of membership. The turn out in the referendum was 81 percent with 66.4 percent voting in favour of membership. The size of the ‘yes’ vote in Austria will help the ‘yes’ campaign in the Nordic states which are due to hold referendums in the autumn. If more than one of the applicants vote against membership of the Union, it will be a serious blow to European integration and might further undermine confidence in the Union among the member states, notably Germany.

5.7 The EFTA accession negotiations took place more rapidly than any previous negotiations because of the level of harmonisation that had already taken place in the EEA Agreement and because these were four highly developed and prosperous states. Policy areas outside the single market, notably agriculture, fisheries and regional policy proved the most difficult to handle. The difficulties encountered in coming to agreement on agriculture and budgetary issues highlight just how difficult the eastward enlargement is going to be. Because of the pressure of public opinion in the EFTA states the Union was willing to search for solutions in the contentious areas. EFTA countries ultimately then got a good deal because of their bargaining power. On the one hand their membership will bring positive budgetary benefit to the EU. On the other their electorates had to be convinced of the benefits of membership. The deal worked out for Iberian accession was less generous. Neither Spain nor Portugal were likely to become net contributors to the EU, and their electorates were anxious for entry. It is likely in the case of Eastward Enlargement that the negotiations and outcome will follow the Iberian model.

6. The Countries to the East: A Union of 20/21

6.1 For the countries of East/Central Europe, membership of the European Union is their key foreign policy goal. In its January 1994 statement on the entry into force of the Europe Agreements, the Hungarian Government states that ‘the attainment of membership in what has now become the European Union is a strategic aim of the Hungarian Government and a priority in our foreign, security and economic policy alike’. (Budapest, January 31, 1994) Membership symbolises ‘rejoining’ or‘ returning’ to Europe following their isolation from Western Europe. It is regarded as an essential component in the transformation of their systems from state controlled economies and totalitarian political systems to free markets and liberal democracies. Accession to the Union means consolidating the results of democratic and systemic transformation and accelerating economic development. EU is profoundly political for these states. It will assure them of their place in the future European order and will enhance their security and economic well-being. For the countries of Western Europe, the shared assumptions and geographical limits of a divided Europe are gone. It is important to recall that the burdens and costs of the Cold War order fell disproportionately on the states that made up the former Soviet bloc. Western Europe is now being asked to respond to the need of these states in their search for stability and economic well-being. President Havel’s speech to the European Parliament highlights the importance of European Union as a value to the countries to the East. He said:

The Czech lands lie at the very centre of Europe and sometimes even think of themselves as its very heart. For this reason, they have always been a particularly exposed place, unable to avoid any European conflict. In fact, many European conflicts began or ended there. Like certain of other Central European Countries, we have always been a dramatic cross-roads of all kinds of European spiritual currents and geographical interests. This makes us particularly sensitive to the fact that everything that happens to us intrinsically concerns all of Europe. We are among the prime witnesses of the political reality of Europe’s interconnectedness. That is why our sense of co-responsibility for what happens in Europe is especially strong, and also why we are intensely aware that the idea of European integration is an enormous historic opportunity for Europe as a whole, and for us. (President Havel: European Parliament, 8 March 1994)

Since 1989 the countries of East/Central Europe have been seeking to enhance their relationships with and to join West European organisations such as the Council of Europe, NATO and the EU itself. Their long-term objective is to be fully integrated in these organisations for political, economic and security reasons.

6.2 The scale of change that the former Soviet bloc states are undertaking should not be underestimated. The process of transformation can be seen in the economic, legal and political realm. See Table 9.

Table 9: System transformation in East/Central Europe.

Reform on this scale is a time-consuming and uncertain business because of the economic hardship caused and its effect on nascent democracies. Inevitably there are differences in the capacities of different states to establish a new system. All of the states look to the European Union to aid them in the transition process. The key goals of these states are economic progress, a consolidation of democracy and security.

6.3: The Role of the European Union.

6.3.1 Since 1989 the EU [OCED members] has been evolving a response both politically and in terms of programmes to events in the East. Clearly, stabilising the process of change and stabilising democracy is in the interests of the European Union and its Member States. Since 1989, the EU has responded in an evolutionary manner by strengthening the web of ties that join the EU and its neighbouring states. The EU sought a network of co-operation with the countries of East/Central Europe but did not at the outset wish to contemplate full membership of the Union. The main elements of the EU’s response are

Aid

Technical Assistance

Co-operation Agreements. (See Table 10 for a summary of EU policies

Table 10: EU Policies towards Eastern Europe

In 1989, the Group of 24 decided to embark on an extensive programme of aid for Poland and Hungary, the two countries at the vanguard of the reform movement. The G24 decided to give the European Commission the co-ordinating role in the development of the aid package. As the process of reform spread more states became involved in the Phare programme. Five criteria governed access to the programme: the establishment of the rule of law, respect for human rights, free elections, political pluralism and progress towards a market economy. EC aid was from the outset was conditional on developments within these states. The European Training Foundation and the European Bank for Reconstruction and Development were also part of the Western response. In 1990 the Commission also launched the Tempus programme.

6.3.2 The EC set out to establish new forms of co-operation with the countries to its East. At the Strasbourg European Council, the Community emphasised its role as an anchor of stability in the following terms:

In this time of profound and swift change, the Community is - and must also be in the future- a firm point of reference with a strong power of attraction. It remains the cornerstone of a new European architecture and, in its desire for openness, the stabilising influence in a future European balance. (Strasbourg European Council, December 1989).

The President of the Commission, in the 1990 programme, argued that the Community had to ‘devise new forms of co-operation’ to provide for ‘genuine dialogue and economic and political consultation’ with the countries of the East. (Commission Work Programme 1990) The Commission and the member states opted for a highly differentiated approach to the states in the former Soviet bloc. Three types of relationships may be identified.

1. Europe Agreements offered to Poland, Hungary and the Czech and Slovak Republics in the first instance. This model was later extended to Bulgaria and Romania and a Europe Agreement is being negotiated with Slovenia.

2. Trade and Co-operation Agreements were offered to the three Baltic states. The conclusion of Europe Agreements with these countries remains the aim of the Union.

3. Co-operation Agreements were offered to the states of the CIS.

6.3.3 The states that have signed Europe Agreements are clearly at the head of the queue for the next enlargement of the EU. The Agreements include provision for

•association institutions

•political dialogue

•a free trade area in industrial goods with limited concessions in agriculture

•economic and financial co-operation

•cultural co-operation.

The first of the Europe Agreements (Poland and Hungary) entered into force on the first of February 1994. See Appendix 1 for a summary of the Agreements. There is a reference in the Preamble of these agreements to EU accession as the ultimate but not an automatic goal of the agreements.

6.3.4 The Visegrad states were determined to translate this aspiration into an EU goal although the Union itself was extremely cautious. The Commission’s 1992 Report on Enlargement for the Lisbon European Council states, on the one hand that, ‘The Community has never been a closed club, and cannot now refuse the historic challenge to assume its continental responsibilities and contribute to the development of a political and economic order the whole of Europe’ (Para.5) and on the other hand, that ‘membership lies well into the future’. (para 37). However at the Copenhagen European Council in June 1993 following sustained pressure from the Visegrad, the Union asserted that the accession of the East/Central European states was one of its goals.

The Conclusions of the Council stated that:

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. (Conclusions of the Presidency, Copenhagen European Council, June 1993)

The Council also agreed to accelerate market access, modified financial assistance and sought to ‘enter’ a structured relationship with these states. In April 1994 both Hungary and Poland formally applied to become members of the Union. The Commission will now have to draft an Opinion on these applications. Put simply, the issue of the next enlargement is already on the formal agenda before the EFTA enlargement is realised.

6.4 Issues raised by a Central/East European Enlargement

6.4.1 The issues raised by this enlargement are qualitatively different than those raised by previous enlargements because of the nature of the challenges facing the former communist states and the continuing uncertainty about the process of transformation and the adaptation that the Union itself will have to undergo if it is to manage this enlargement without undermining the Union itself. The Copenhagen European Council formulated three broad criteria for accession:

1. Appropriate and compatible political systems

2. A functioning market economy capable of competing in the EU

3. Acceptance of the acquis and the longer term political objectives of the Union (Copenhagen European Council Conclusions)

The Copenhagen Council formalised, with an eye to Eastward Enlargement, the main conclusions of the Commission’s Report on Enlargement to the Lisbon Council (See 2.2).

These criteria imply not only that the applicants have viable democratic system but that they are capable of harmonising their laws with the acquis and that their administrative, and judicial systems have the capacity to participate in an intensive and extensive system of co-operation. EU membership places a heavy administrative burden on its member states. A strategic plan to aid their adaptation is necessary and should begin as quickly as possible. The Conclusions of the Corfu European Council call on the Commission to prepare a report on how the Union itself can participate in preparing these countries for accession. The applicants themselves are already doing considerable work in this area themselves. For example, the Polish Government initiated a programme adjusting the Polish Economy and Legal System to the requirements of the Europe Agreement in 1992. The adjustment process is a continuous one. In the area of legal harmonisation, procedures have been introduced which provide for an obligatory assessment of draft laws from the point of view of their compatibility with EU legislation. Similar processes of adjustment are being undertaken in the other states.

6.4.2 Accession of the states of East/Central Europe would add significantly to the population of the Union. The four Visegrad states would add some 65 million people,- approximately the population of Greece, Portugal, Spain and Ireland. Bulgaria and Romania would add a further 32 million. Hence, while no one state would add significantly to the population of the Union, accession is likely to include more than one country. Not only will the population of the Union increase significantly but these states have income levels well below the EU average. The EFTA states, with a population equivalent to Bulgaria and Romania, have a combined national income exceeding that of all six East European states. The challenges to the Union include changes needed to existing policies, public finances, market access, institutional questions and the future direction of the Union.

6.5 Changes to Existing Policies

6.5.1 Agriculture :An eastward enlargement has significant implications for the Common Agricultural Policy, cohesion policy and the free movement of labour. Since the early 1980s, the Union has been engaged in a difficult process of adjusting the Common Agricultural Policy to market forces in an attempt to curtail CAP expenditure and over-production. The CAP still constitutes a sizeable proportion of EU expenditure. Agriculture is a major component of the economies of the Central/East European states in terms of employment. In 1991, the proportion of the total labour force employed in agriculture was Poland (28%), Hungary (19%), Czechoslovakia (12%), Bulgaria (20%) and Romania (28%) [in contrast to 10% in Ireland]. Although agriculture in these countries has been experiencing considerable difficulties because of the land privatisation process and the loss of traditional markets in the former USSR, the long term potential of agriculture as a source of export income is sizeable. This has not yet been realised in the context of the Europe Agreements. In the period 1989-91 EU exports to the East rose by 47% but imports increased only by 19 %. There was a further decline in 1992 which has led to criticisms of the EU’s market opening measures. During 1992 the EU applied minimum prices on imports of red fruits as well as a safeguard measure for cherries. The longer term prospects for agriculture are good. This is particularly true of Hungary which has a large and efficient agricultural sector and of Poland with abundant land and a large agricultural workforce. A number of studies has estimated that these states will become net exporters following increases of 40% in output as ownership patterns change and infrastructure are put on a proper basis. (CEPR, 1992, p. 83) If the CAP were to apply to the East/Central European states under current terms, they would qualify for extensive export subsidies and support payments. The adaptation of the CAP is clearly one of the most difficult issues to be tackled. Some observers argue for even more drastic reform of the CAP. For example, Wijkman suggests that ‘The EU would have to reform the CAP if major agricultural producers such as Poland, Hungary or Romania were to become members. Were these low cost producers to enjoy the current level of protection afforded by the CAP they would generate surpluses which would have to be disposed of one way or the other at high cost to the tax payers’ (Wikjman, 1992, p.13). Ludlow argues that ‘the extension of the CAP as it is currently structured, would blow the EU budget sky high and flood the countries concerned with excessive funding for a sector that in every case needs radical restructuring’.⁴

6.5.2 Cohesion Policy: Since the Single European Act, the EU has enhanced solidarity between its richer and poorer parts by agreeing to the Delors I package, which increased budgetary flows to the peripheral parts of the EU. This trend was further strengthened by the decision of the Edinburgh European Council to the Delors II package in December 1992. The current budgetary agreement runs to 1999. Given the size of the Visegrad states and their level of economic development they would be major beneficiaries of financial flows from the Union’s redistributive measures. For example, in 1992 Greece and Portugal received a per capita transfer of approximately 200 ECU from the structural funds. Under the terms of the Edinburgh Agreement this should rise to 400 ECU by 1999. If equivalent transfers were to be made available to the four Visegrad states a total of 26 billion ICUs would be required. This figure is in stark contrast to the 3.5 billion ECU that the Union transferred to East/Central Europe in 1992. At present the Associated states receive transfers that are less than 10% of those allocated under the structural funds to the four cohesion states. The criteria for redistribution in the Union are likely to change following an Eastern Enlargement.

6.5.3 EU Public Finance: An eastward enlargement has significant implications for the size and composition of the EU budget and for EU public finances. Although it is highly speculative to attempt to calculate the budgetary consequences of enlargement, it is clear from the discussion of the CAP and cohesion policy that the Visegrad states would be net beneficiaries of the budget and this in turn implies that the size of the budget will have to increase significantly. A number of studies has calculated the budgetary consequences of an eastward enlargement. See Table 11

⁴ CEPR, Is Bigger Better? The Economics of E Enlargement, London, 1992.

Ludlow P.,Beyond maastricht, CEPS Paper, no. 79, October 1993.

Wijkman M.P., The European free trade Area Expanded/The European Community, EFTA and Eastern Europe, EFTA Occasional Paper, 1992.

Table 11: Budgetary Consequences of an Eastward Enlargement (Bn ECUs)

Source: Baldwin R. Pan European Trade Arrangements Beyond the Year 2000, London, CEPR, 1994 for a discussion of all calculations.

The difference in the estimates highlights the difficulties of calculating the budgetary consequences of an eastward enlargement. The Commission estimates allow for major increases in cohesion spending and increases in CEEC agricultural output. The 1992 CEPR study presented the choice in the following manner:

Either it must abandon for the foreseeable future any ambition to admit the indisputably European CEECs, or their admission must be accompanied by a change in the budgetary rules. Even though the EFTA countries will be net contributors, their contribution will go only a small way to finance Enlargement even to a small number of CEEC’s (CEPR 1992, p. 73)

The Baldwin study (1994), on the other hand, argued that a small eastward enlargement involves a managable cost to the Union but that a significant eastward enlargement would radically alter the EU budget, because the 100 million CEEC citizens are poorer and more agricultural than the average EU member. Although an increase in the size of the budget by 25 billion ECU would be sizeable, it could be borne by the EU economy which, after the political problems of arriving at this level of transfer, should not be underestimated. Changes to the existing budgetary bargains cannot be avoided.

6.5.4 Migration: As stated above the populations of many of the eastern states are sizeable. Wage differentials between the Eastern countries and neighbouring EU countries might lead to substantial migration from East to West if the free movement of labour were to apply. It is estimated that Greek and Portuguese incomes are around 40% of Germany’s and incomes in the CEECs are around 80 % of the Greek and Portuguese figures. (CEPR, 1992, p.86) Outward migration pressures might come from high unemployment and the underemployment of agricultural workers. Notwithstanding the wage differentials, an extensive study estimated that around 3% of the population of Eastern Europe might want to move west in the next fifteen years. Migratory flows of this size may cause problems for some EU states.

6.5.5 Trade: Access to the EU market is essential for the transition process in the Eastern countries. Since 1989 there has been a significant shift in the trade patterns of the Eastern countries towards the EU. The EU, and particularly Germany, has become the most important trading partner for the countries of East/Central Europe. The Union now takes 25 bn ECU of their exports, well over 80% of their exports to the OECD states. These countries are already becoming integrated in the West European economic space. Exports to the EU amounted to 56% of Polish exports and 50% of Hungarian exports, for example. See Tables 12 and 13 for an overview of the trade pattern.

Table 12: Foreign Trade of the Central European Countries (according to a percentage of total trade)

Source: Commission Briefing Document: 31 January 1994.

Table 13: EU-CEEC Trade 1990-91 (Volume and annual growth rates)

Source: Commission Briefing Document, 31 January 1994.

EU exports have grown more rapidly than EU imports from the CEEC; in 1992 EU exports to the CEEC amounted to 21.4 bn ECU, in contrast to 18.9 bn ECU of imports from the countries of Central and Eastern Europe. EU exports to the CEEC increased by 42% in 1992, in contrast to 17% increase in CEEC exports to the Union. The following quote form the former Polish Prime Minister, M. Hanna Suchocka, is illustrative of the disappointment being expressed in the CEEC about market access. She suggested that “The European Community’s trade restrictions, which we must often cope with, applied under any pretext, cause apparent damage to our countries and wreck our faith in the good will of the Community. There is suspicion that particular interest groups and influential lobbies of various countries have the power to impose their own will at the expense of the strategic interests of Europe”. (Warsaw, 24 May 1993) Complaints from the CEEC led to an improvement in the market opening measures at Copenhagen. However, the Polish Government was quick to point out that the concessions, would over a five year period, only add approximately $122 million to Poland’s revenue from exports to the EU. (Ludlow, 1993, p.45) The real difficulty with market opening measures is that the EU remains open to internal producer pressure in a number of sectors, notably, textiles, steel and agriculture, precisely those sectors which the CEEC can produce for export. Yet economic transition in the CEEC depends on access to the EU market, and on being able to sell their goods to the large EU market.

6.6 The Accession Applications

6.6.1 The decision of the Hungarian and Polish Governments formally to lodge applications for membership in April 1994 stems from their desire to make the ultimate goal of membership very explicit. The Czech Government decided not to lodge a formal application at this stage. Formal applications will have to be responded to by the Council of Ministers and the Commission. The eastward enlargement may now be part of the deliberations at the 1996 IGC. Once the work of the 1996 IGC is complete, the two governments anticipate the opening accession negotiations. Their capacity and willingness to adhere to the acquis communautaire and the political goals of the Union should be the major condition for membership according to the Polish and Hungarian Governments. Issues such as the length of the transition period and the implementation of the obligations of membership should be worked out in the accession negotiations. Both these states expect to be in the EU before the ten year transitional period in the European Agreements ends. On the day the Europe Agreement come into force, the Polish Council of Ministers expressed the conviction that, ‘thanks to mutually beneficial co-operation with the Member States of the European Union, Poland will be able to acquire Union membership even before the expiration of the transition period stipulated by the Agreement’. Within the Union, Germany has been most favourably disposed towards a fast-track membership for the Central and East European states. Germany is expected to use its Presidency of the European Union (during the second half of 1994) to advance preparations for the accession of the Central Eastern European States. A membership date of 2000 has been suggested by some CEE States. The prospects of membership by that date depend on the outcome of the 1996 IGC, the continuing process of reform in the CEEs and security developments in the region.

6.6.2 The Balkans

The continuing armed conflict in the former Yugoslavia ensures that the question of the Union’s long-term relations with the Balkan states must await a political settlement to the varied conflicts in this part of Europe. War in the former Yugoslavia means that Croatia, Bosnia-Herzegovina, Macedonia and Serbia cannot negotiate even the first steps of Trade and Cooperation Agreements with the Union. Slovenia is the only ex-Yugoslavian state that has so far established contractual relations with the Union. The Corfu European Council June 1994 emphasised the need for increased co-operation with Slovenia.

7: The Next Mediterranean Enlargement: A Europe of 23

7.1 Three Mediterranean states, Turkey, Malta and Cyprus are in the queue of applicants. The Turkish application dates from 1987. Malta and Cyprus applied in 1990. From the outset, the EU has had an interest in the Mediterranean and launched its global Mediterranean policy in the 1970s. Mediterranean countries on the northern shore have all applied for full membership over time. Turkey, which has an association agreement with the EU since 1963 sees membership as the fulfilment of the westernising policies of Ataturk since 1922. Turkey is a member of NATO and eventual membership of the EU was foreseen in the original Association Agreement. This was regarded as automatic by the Turkish side, whereas the EU tended to see it as issue for negotiation. There are four major issues to be addressed in relation to Turkish accession to the EU. First, there are economic difficulties because by the standards of the EU, Turkey is a poor, underdeveloped country with over 50% of its population engaged in agriculture. Turkey’s low per capita GDP would make it a net beneficiary from the structural funds and the CAP. Turkey has a large population of 54 million, which is rising rapidly. Wage differentials and population growth could lead to significant migratory pressures. Second, there are problems related to the stability of Turkish politics and questions of human rights. Third, Greece has adopted a negative attitude to Turkey within the EU, blocking the fourth financial protocol, which is part of the Association Agreement. Fourth, Turkey’s European identity is part of the debate. Turkey is a Muslim country which straddles both Europe and Asia. Very little Turkish territory is part of geographic Europe. That said, since the establishment of the modern Turkish state under Ataturk, Turkey sees itself as a Western state. In the EU, memories of the Ottoman Empire and fears of Islamic fundamentalism colour attitudes. The Commission’s Opinion on Turkish membership was published in December 1989 and was not positive. The reasons were those discussed above. The EU offered an enhanced Association Agreement as an alternative to full membership. The Turkish Government sees the rejection as temporary and anticipate that their application will have to be reconsidered in the future. There appears to be little prospect of accession negotiations during this decade.

7.2 In its report on enlargement, the Commission observed that ‘In the case of Malta and Cyprus, the adoption of the Community’s acquis would appear to pose no insuperable problems’ (Lisbon Report 1992). The Maltese application arose from the 1992 programme and from the consequences of the Iberian enlargement. Malta, with a population of 350,000, is heavily dependent on trade with the EU. Since the Nationalist Party took power from the Labour Party in 1987, it has attempted to reassert Malta’s European identity. The Labour Party continues to oppose EU membership and is committed to the continuation of the existing Association Agreement. The Maltese Government has already said that it is ready to subscribe to the Union’s Common Foreign and Security Policy, including the framing of a common defence policy. In economic terms, the main burden would fall on Malta itself, which will have to engage in a radical overhaul of its economy’s regulatory framework.

7.3 The application from the Greek part of Cyprus poses a very different set of problems for the Union. The partition of the island since the Turkish invasion in 1974 makes this application highly problematic for the Union. The Turkish Cypriots oppose the application and argue that EU membership cannot be considered until there is an internal settlement. There are few problems of an economic nature. The southern part of Cyprus is in the process of setting up a customs union with the EU as part of the Association Agreement; its per capita incomes are on par with Spain and its economy is strong. The conclusions of the Corfu European Council (June 1994) marked an new important development in relations with Cyprus and Malta. The Council noted that when negotiations on the financial protocols to their existing agreements with the Union are completed, ’the next phase of enlargement of the Union will involve Cyprus and Malta. The net result is the applications of both states have moved up the queue.

8. The Stark Choices Facing the Existing Member States and the Union

8.1: Since 1973 the Union has engaged in four rounds of accession negotiations. The process led to adaptation, not transformation, of policies and decision-making processes. The next wave of enlargement cannot be accommodated on this basis. If the Union is to maintain its coherence and purpose, difficult choices will have to be made by the member states, EU institutions and potential members. Future increases in the membership of the Union cannot be accommodated on an ad hoc basis. The Union cannot expand indefinitely to the East and South without addressing serious questions about its governance capacity and its policy mix. The Lisbon Report argues that:

The accession of new members will increase the Community’s diversity and heterogeneity. But widening must not be at the expense of deepening. Enlargement must not be a dilution of the Community’s achievements. On this point there should be absolute clarity, on the part of the member states and of the applicants. (Lisbon Report, 1992)

The United Kingdom and Denmark have shown their support for rapid enlargement. Both have greatest political difficulty with a deepening of political integration, which leads to the suspicion in other member states that widening is a means of weakening the EU. France is reticent about enlargement and fears that a dilution of the Union might ensue. Germany has a major interest in an eastward enlargement but is willing to deepen integration as well. The Benelux are open to enlargement, but not at the cost of the current acquis. During the EFTA negotiations, Spain showed itself particularly concerned about a shift in the centre of gravity of the Union to the North and would also fear an eastward enlargement because of its interest in redistribution. Hence, there are member states which want a deepening without widening and vice versa. The balance will have to be struck somewhere between the two extremes.

8.2 The next enlargements raise stark policy choices for the Union. From the brief discussion above it appears clear that both agriculture and the EU budget are the most pressing issues to be addressed. The CAP, even with the MacSharry reforms and the GATT, could not be extended to the countries of the East and South without further major reform. This has implications for the benefits and interests of the existing member states. Ludlow suggests that rather than adopt a ’wait and see’ approach the EU and the CEEC should begin to prepare the ground for membership by developing a strategy for dealing with sensitive sectors such as agriculture, textiles and steel. (Ludlow 1993, p.45) The EU budget is another issue that will have to be addressed as all of the prospective members have per capita incomes well below the Union average. Questions of cohesion and redistribution take on a different character when addressed to the countries of the East and South. The debate will have to range over the size of the budget, a re-direction of its resources and new spending priorities. The internal balance between the centre and the periphery will be altered. The Union’s budgetary resources will have to increase, even by amounts that appear inconceivable at present. Net beneficiaries in the Union may become net contributors. Past experience with both the CAP reform and the budget point to a highly contentious set of negotiations.

8.3 Governance and Institutions: The Challenge facing the Union is to construct a governance structure that will be effective and democratic. An expansion of the Union challenges the capacity of the Union’s institutions by increasing the range and complexity of interests that have to be accommodated and by altering the size of the

institutions. Even before the next enlargement the Union suffers from three deficits:

•a capacity deficit

•a democracy deficit

•an implementation deficit

Legislation emerges from a time-consuming process of bargaining and negotiations involving Commission Directorates-General, Council Working parties, interest organisations and the European Parliament (E.P.). The complexity of the decision-making process was exacerbated by the TEU with its three pillars, multiple decision rules and ‘opt outs’. The Union has a limited capacity to deal with the big issues and to co-ordinate across issues. Effectiveness is hampered by the need to work in a multiplicity of languages. Laws emerge from a process that frequently leads to ‘lowest common denominator’ outcomes. There is frequently an ‘expectations/credibility’ gap in the Union; its ambitions can reach beyond its capacity to deliver. The Union’s ‘democratic deficit’ was highlighted during the TEU ratification crisis. National parliaments have difficulty in dealing with EU business and in holding their representatives accountable. The EP’s role in the process has been enhanced, but it suffers from problems of distance and absenteeism. Direct elections enhance the Parliament’s democratic credentials but these elections are not as salient as national elections. Addressing the democratic deficit is not as simple as enhancing the powers of the EP. The Union also suffers from an implementation deficit. There are real difficulties in many member states in transposing and applying EU law.

8.4: Institutional Adaptation: The question of small states: Since its inception, the Union has had a balance of small and middle-range states. The pool of candidate countries consist in large measure of small states; Poland and Turkey are the only large states in the enlargement queue. Small states bring the question of representation sharply into focus. While the large states have always accepted that small states should have a disproportionate presence in the institutional system, they may not accept the existing arrangements in the longer term. The small state/large state balance is now an agenda issue. It has implications for the size and distribution of seats in the EP, membership of the Commission, the nature of the Presidency and qualified majority voting (QMV) in the Council. To illustrate just how disproportionate QMV is at present see Table 14 below.

Table 14: Weighted Voting in the Council (EFTA Enlargement) at present.

Even before German unification, Germany with about 60 million citizens was only 11 times more powerful in terms of voting power than Luxembourg with a population of 375,000. The power per citizen is inversely related to country size. This is why Cyprus and Malta raise substantive institutional issues. As the EP gains additional powers, the large states may seek a redistribution of seats that follow population criteria more closely. The adjustments in the size of the EP following German unification is indicative of what might come. Ireland, as a small state, must pay considerable attention to this debate and must evolve strategies to deal with the issue of representation. The Benelux states, in a submission to the Lisbon European Council, explicitly argued that:

•the larger states would have to continue to accept over-representation of the smaller member states.

•the Commission should have one member per state

•the six-monthly rota of the Presidency should continue

•the present balance in QMV should continue whereby the larger states cannot combine to impose decisions but small states cannot combine to block them.

This argument has considerable merit because large state power in the EU system is not only expressed in voting power in the Council. Germany, with ten votes, has much more political, economic and diplomatic influence than a small state with three votes. It could be argued that small states must be compensated for their size. The large states may not accept this in a Union of 20/23 states.

8.5: Institutional Adaptation: Possible Models: The prospect of further enlargements has implications for the role and functioning of each of the institutions. See Figure 1 for a synopsis of the main issues.

Figure 1: Institutional Questions that must be addressed

The pressure for reform in the Union raises a number of choices that may be dealt with under three headings. First, the member states may opt for a ‘status quo plus model’ which would involve mechanical adjustments to the existing decision-making system. This was essentially the approach adopted for the current EFTA enlargement. Second, a ‘pragmatic evolutionary model’, whereby the institutional system would adapt to the new environment but in a pragmatic manner. Attention would be paid to the twin demands of efficiency and democracy. Third, there is the possibility of a great leap forward or a ‘federal constitutional model’ whereby constitution building takes the form of a new political order in the Union. The approach adopted will have implications for the Union’s institutions and Irish representation. See Figure 2 for a synopsis of the implications of the different approaches and the choices arising from these approaches.

Figure 2: Possible Adjustments in EU’s Institutions

Source: Adapted from Trans European Policy Studies Association study entitled ‘Enlarged Community: Institutional Adaptations’, Bonn, June 1992.

The experience of the EU in the past suggests that the Union will either adopt a ‘status quo plus’ model or the ‘pragmatic evolutionary one. There is little political capacity in the Union to opt for the ‘federal/constitutional’ route. The experience of the TEU highlights the fact that macro-reform is extremely difficult in the EU. The ‘status quo’ approach would lead to an EP of 1000 members, a Commission of between 20 and 24 members and considerable blockages in the Council. The pressures of enlargement are more likely to led to the ‘pragmatic evolutionary’ model which would entail some adaptation of the present institutional balance and member state representation.

8.6 The ‘pragmatic evolutionary’ model: Further exploration of this model is worthwhile as it is perhaps the most likely approach to be adopted in 1996 and in future enlargement rounds. The ‘status quo’ model has run its course in the EFTA negotiations. In the ‘pragmatic evolutionary’ model, reform of the institutions would seek to address the issues of working methods and representation. This approach would envisage a re-distribution of seats in the EP based on ‘regressive proportionality’, a term adopted by the Belgian MEP, Karl De Gucht. ⁵. It seeks to reconcile the principle of ‘one man/one vote’ and the protection of the smaller member states. Following De Gucht’s calculation, Ireland would have 12 representatives in the EP instead of the current 15; the former figure is still significantly higher than the number Ireland would receive under strict proportionality. The issue of the Presidency and QM are the two critical issues in relation of the Council of Ministers.

⁵De gucht proposals to EP, 1992

A larger number of states in the Union may call into question the efficacy of the six monthly rotation of the Presidency. The Presidency can place considerable burdens on the smaller states. Could Malta adequately conduct EU business and represent the EU internationally? A proposal in the Hansch report (1991) was to group states into smaller, medium and larger ⁶. A member of all three groups would be represented in each ‘troika’ but the larger states might take the chair on all issues or major international issues. The question of QMV was highlighted towards the conclusion of the EFTA negotiations. At present a qualified majority represents 71 per cent of the votes in Council. The question is whether these proportions should remain for future enlargements or not. The larger states may want to lower the threshold for a QMV or introduce the notion of a double majority, i.e. a majority of votes and a majority of the member states populations. The size and composition of the Commission is an additional issue to be addressed. The critical issue is whether to modify the principle of one national from each member state. If this is modified, one could envisage a Commission of 12 with the inclusion of junior Commissioners and a rotation of full Commissioners from the smaller member states. Ireland will have to work out a strategy to respond to the issues of representation and influence in the future Union.

8.7 ‘Variable Geometry’, ‘Opt Outs’ and ‘muddling through’: As the Union enlarges it will have to come to terms with increasing diversity. In the past, notwithstanding the importance of core policies, the need to accommodate diversity has been a feature of policy-making and a pervasive theme in the debate about the development of the Community. Variable geometry can be seen in transitions periods, derogations, differentiated application of EU law, ‘opt outs’ and the development of non-Treaty based polities. The TEU and the subsequent Danish ‘no’ increased the pressures for a ‘variable geometry’ approach. The changing dynamic in Europe gives added saliency to the search for options short of full membership of the Union. This is apparent in debates on the CEECs. The Commissioner, Mr. van den Broek, suggested that:

⁶Hansch K., Report of the Committee on Institutional Affairs on the structure and Strategy for the European Union with regard to its enlargement and the creation of a Europe-wide Order, EP, 152 final, 21 May 1992.

The Union should help create the conditions for membership by breaking out of the separate, bilateral arrangements which link it to each east European country. Instead it should set up with its partners a multilateral political and economic relationship which would be a true precursor of membership (van den Broek, March 1994)

The question of including the CEECs in Pillars two and three of the Union has been highlighted as one possible interim measures in the lead-up to full membership. To date, the Union has agreed to associating the CEECs with the Common Foreign and Security Policy and is attempting to work out modalities of achieving this. This points to an intensification of political dialogue between the EU and the CEECs. There have also been proposals dealing with trade which would replace the present hub-and-spoke bilateralism with an association of association agreements.⁷ See Appendix 2. This model allows for enhanced trade co-operation not just between the EU and each Associated state but between the EU and an outer ring of states. This is analogous to the way bilateral arrangements with individual EFTA states were transformed into a multilateral relationship. This should not be seen as a diversion from full-membership but a step towards it.

⁷Baldwin R., Pan European Trade Arrangements Beyond the Year 2000,CEPR, 1994.

9.1 Conclusions

9.1.1 The European Union has embarked on a process of enlargement that could take its membership to 30 states. Enlargement is the most important challenge facing the Union in the 1990s and beyond. The widening of the Union is taking place on a phased basis, beginning with the EFTA enlargement. The accession negotiations with the four EFTA applicants were concluded in March 1994. The negotiations arrived at a successful outcome for the applicants in so far as the EU negotiators were sensitive both to their needs in a number of policy areas and to the fact that referenda are part of the ratification process in the EFTA states. The most sensitive issues in the enlargement negotiations were agriculture, regional policy, budget, institutions, common foreign and security policy, transit for Austria and fisheries for Norway. The accession treaties will allow Governments in the applicant states make a strong case for membership. Public opinion in the Nordic states remains divided on the issue of membership and the outcomes of the referenda in Norway, Sweden and Finland remain difficult to predict. The Austrian electorate gave a decisive ‘yes’ to Union membership in June. The current enlargement took place in the context of the existing institutional balance. Institutional change was limited to numerical adjustments to membership of the institutions and qualified majority voting.

9.1.2 Accession by the four applicants would consolidate the West European trading system and would further enhance the common economic space. All of the EFTA states are more dependent on the EU market than they are on the EFTA market. The strengthening of the Union in various areas, notably social and environmental policies, can be expected from the inclusion of advanced industrialised economies of the EFTAtype. The accession of states with long traditions of open government can assist the Union in its search for ways of dealing with the democratic deficit in the Union. Unlike the European Economic Area, membership of the Union would allow these states participate in decision-making on the internal market. Austrian, Swedish and Finnish accession increases the number of non-NATO member states in the Union. The consequences of this for the future shape of the common foreign and security policy will become clearer as the CFSP is elaborated in the years ahead.

9.1.3 Further enlargements are already on the agenda with applicants from two of the Visegrad states and a number of Mediterranean states. Enlargement to embrace a number of the Visegrad states will happen before a southwards enlargement (although Cyprus and Malta are now being considered for the next enlargement). Stability in the East is a central aim of German policy. For the states of East/Central Europe, membership is their key foreign policy goal. Assessment of an eastward enlargement requires a focus on its timing, institutional consequences and policy implications. Furthermore, the nature and extent of the transition process in eastern Europe will have a bearing on the process of enlargement. Poland and Hungary submitted their applications to the Council in April 1994. For the Visegrad states, the Europe Agreements represent a transitional phase before full membership is reached. The Polish and Hungarian governments express the conviction that they can achieve membership before the ten year transitional period in the Europe Agreements ends. An accession date of 1999 is mooted. So far, no calendar has been worked out within the Union. The opening of accession negotiations will depend on developments within the Union, in the applicant states and in the wider Europe.

9.1.4 The issues raised by this enlargement are qualitatively different from those raised by previous enlargements because of the nature of the challenges facing the former communist states and the adaptation that the Union itself will have to undergo, if it is to manage further enlargement without undermining the Union itself. The choice between deepening or widening no longer holds. An eastward enlargement has significant implications for the CAP, cohesion policy and EU public finances. It will disturb the internal bargains that have sustained the Union in the 1980s. The basic institutions of the Union were designed in the 1950s to cope with a membership of six. Four subsequent enlargements have not led to an overhaul of its institutions. The Union cannot cope with future enlargements without addressing the institutional issues. If the Union is enlarged without a serious examination of its institutions, it will become a relatively inefficient organisation incapable of delivering a framework for policy-making.

10. Recommendations

10.1 The Joint Committee welcomes the conclusion of the accession negotiations with Austria, Sweden, Finland and Norway and the sizeable ‘yes’ vote in the Austrian referendum. It looks forward to an endorsement of Union membership in the other three EFTA States. Ireland shares with the applicant countries a similarity of views on many international issues. In this context the Joint Committee recommends that Ireland should take a leading role in identifying areas of common interest with the acceding countries, particularly on policies relative to peacekeeping and collective security, with a view to developing initiatives within the CFSP.

10.2 The Joint Committee supports the continuation of the Enlargement process and endorses the present phased approach to Enlargement through negotiations with groups of European States at similar levels of development. The historic importance of the events which have taken place in Europe since 1989 makes relations with the former communist block the central challenge facing the Union in the 1990s and beyond. It is in the Union’s interest that the transition process in the east is successful. The common objective must be to integrate the former communist states into a continental wide system that ensures stability and security. The Joint Committee recommends that the Europe Agreements be seen as preparation for full membership and that the provisions of the Agreements be fully utilised. The Joint Committee welcomes the decision of the Corfu European Council to have a report drafted on how the Union can work with the countries of central and eastern Europe to prepare a strategy for accession. It recommends that Ireland participate actively in the economic and social programmes designed for the preparatory process and thus lay down the foundations for durable and mutually productive relations with the countries of Central and Eastern Europe.

10.3 The Joint Committee endorses the broad criteria for membership agreed at the Copenhagen European Council, notably

-appropriate and compatible political systems,

-a functioning market economy,

-and acceptance of the acquis.

The Joint Committee recommends that an additional criterion and pre-condition for entry to the EU must be respect for Human Rights.

10.4 The Joint Committee welcomes the strengthening of the social dimension of the EU, which the accession of the EFTA countries will bring. It recommends that, in any future enlargement, there must be insistence on complete adherence by the applicant States to the provisions of the Social Chapter of the Treaty on European Union.

10.5 The Joint Committee recommends that the policy implications of an eastward enlargement be fully assessed in preparation for the Government White Paper on Foreign Policy and the 1996 Inter-Governmental Conference (IGC). It is important to ensure the widest possible public debate on the implications of EU Enlargement both for Irish foreign policy and for Irish domestic policy.

10.6 The Joint Committee recommends that a balance must be struck between the interests of the applicants and the need for a functioning and effective Union. The timing and nature of the accession negotiations and the transition arrangements must not impair the capacity of the Union to function.

10.7 The institutional issues raised by further enlargements are core issues for the European Union and its development. Pressure for reform in the Union has raised a number of possible choices, which have been dealt with in this report under the following headings:

*status quo plus model

*evolutionary model

*federal constitutional model.

Given the inevitable institutional pressures which a series of Enlargements must bring, the Joint Committee considers that the first model of development cannot continue to be viable. It therefore recommends that the implications for Irish policy of the evolutionary and federal constitutional models be thoroughly examined and debated.

10.8 The Joint Committee recommends that Ireland should play a leading role in elaborating and ensuring the adoption of appropriate and effective mechanisms to protect the unique contribution of small member states. In this regard Ireland should maintain the closest contacts with other small states to ensure that each would have an effective influence in the future on the formulation of policy and on decision-making within the Union. As the EU evolves the fundamental principle (which has always operated in the Community/Union) must remain in place i.e. that small states should have a disproportionate presence in the Institutional system. Larger states have always accepted this principle. However, they may wish to address the large state/small state issue in 1996. Small states must be compensated for their size as the larger states exercise more power in the system.

10.9 The Joint Committee supports the approach of the Benelux countries in their submission to the Lisbon European Council which proposed that;

-the larger states would have to continue to accept over-representation of the smaller member states

-that the Commission would have one member per state

-that the six monthly rota of the Presidency should continue

-that the present balance in Qualified Majority Voting should continue whereby the larger states cannot combine to impose decisions and the smaller states cannot combine to block them.

10.10 The Joint Committee recommends that the Government should deepen political and economic ties with Central and Eastern Europe and should take specific measures to alert Government agencies and the private sector of the mutally beneficial economic opportunities, which will arise as a result of the development of the central and eastern economies. Deep reflection is called for about the use and distribution of resources in Ireland and abroad in order to maximise both politically and economically the opportunities, which the progressive enlargement of the European Union offer. In order to achieve this it is essential that there be strong Inter-Departmental coordination and liaison with the private sector within Ireland and properly resourced and strategically placed representation abroad.

Brian Lenihan T.D.

Chairman

28 September 1994