Transcript The new entrants to the EU, the challenges they pose to

An analysis of the evolution of the EMU and
its future
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1973 – UK, Demark and Ireland join EC. Norway
rejects membership in national referendum. UK
referendum I 1975 supports entry 2:1.
1981 – Greece joins EC
1986 – Spain and Portugal join EC
1987 – European Single Act signed
1988 – Regional Aid doubled. The expansion of
structural funds to poorer regions and countries
1993 – Maastricht Treaty ratified
1995 – Borders come down as result of Schengen
Agreement. UK does not join and Norway rejects
membership of EU in second referendum
1998 – Talks start for major enlargement
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Croatia – quite soon
Bosnia – Herzegovina – early next decade
Macedonia – 2012 or possibly before
Montenegro – again within the next 4 to 6
years
Serbia – probably early next decade,
depends on both economic and political
issues
Albania – 2015?
Turkey – 2015?
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Europe continues to enjoy economic growth,
solidarity, the spread of democratic forces in
countries once under dictatorship
Also – job creation, safer products, lower
prices, greater choice in such sectors as
telecommunications, banking and travel
The EU is NOT just about wealth it has values
– peace, prosperity, freedom and social
justice
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Stabilisation and Association Agreements
Work towards acquis – the 35 chapters of
The EU
Regular progress reports
Inflows of funds – since 1991 Western
Balkans have received Euro 20 billion in
assistance. Funds now simplified into
Instrument of Pre-Accession Assistance
(IPA)
The EU considers itself to be dynamic and
as David Milliband said in Bruges last year it
should expand further
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Though EU = 7% of world population it = 20% of
world trade
Risk is a major deciding factor of the way in which
a is treated - public health, the environment and
consumer protection dictate the rules that govern
its trade, so chemicals are more closely regulated
than pasta
The high risk products are more harmonised than
the low risk – countries can restrict trade under
certain situations e.g. British beef
Approximately 50% of all intra trade is covered by
harmonised legislation
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Has the internal market had benefits – 2.5m 3.5m extra jobs, 900 billion Euros of wealth,
which is equivalent to 6000 Euros per family.
This should increase with the introduction of
services agreement
Next stage is internal market for capital –
make funds is available as in US?
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How have the ‘new’ members faired since
2004 - 2010 and the largest single
enlargement since the founding of the EU?
How have the ‘older’ members adjusted since
the arrival of the new members?
Will deeper or wider integration be the way
forward?
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New members trade with other EU countries
Czech Rep = 79%
Estonia = 73%
Cyprus = 60%
Latvia = 77%
Lithuania = 58%
Hungary = 72%
Malta = 60%
Poland = 75%
Slovenia = 72%
Slovakia = 80%
UK = 57%
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Belgium
Denmark
Germany
France
Ireland
Italy
Spain
Luxembourg
Netherlands
Austria
Portugal
Finland
Sweden
75%
72%
85% (highest)
70%
65%
62%
72%
59%
68%
78%
80%
54%
65%
Euro billion
China
Export
Imports
EU
Exports
Imports
Japan
Exports
Imports
US
Exports
Imports
483
436
883
941
499
405
765
1380
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Bulgaria 5.5
Cyprus 3.7
Czech Republic 6.1
Estonia 9.8
Hungary 4.1
Latvia 10.2
Lithuania 7.6
Malta 2.5
Poland 3.4
Romania 8.5
Slovakia 6.1
Slovenia4.0
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Austria 2.0
Belgium 1.5
Denmark 3.2
Finland 2.9
France 1.2
Germany 0.9
Greece 3.7
Republic of Ireland 5.5
Italy 0.0
Luxembourg 4.0
Netherlands 1.5
Portugal 0.4
Spain 3.4
Sweden 2.7
United Kingdom 2.25
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Does the centralised state lose authority as
more decisions are taken in Brussels? If so,
can European Social Democracy adapt or
will less government intervention styled
politics emerge?
How have the once members of the Warsaw
Pact adapted? Were the wrongs of Yalta put
right?
Are some of the new members more
Atlanticist in approach and so easier for UK
to get on with?
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The US likes EU expansion – why?
Does the introduction of new laws mean a
real change in attitude – e.g. gypsies?
Will there actually be a unified foreign and
defence policy – if there had been might US
have stalled with invasion of Iraq?
What of the relations with Russia post
enlargement?
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Kaliningrad
Shift in Russian focus to Asia and China and EURussia relations are now at best ‘cool’
Flex of economic might in recent energy problems
However, it’s not all good news for US – look at
problems of basing missiles in Czech Republic and
Poland
Will the problems of recent expansion cause
Turkish entry to be delayed – will social and
cultural compatibility be added to the list of human
rights, power of military etc?
Is it best to resolve these issues at national or PanEuropean level?
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500 million and set to rise
By global standards – high earners
Standardised tastes
Credit facilities
Few barriers
Trans national networks
Benefits to AD
Benefits to AS
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What you must show before entering the Euro Zone
Price stability, measured according to the rate of inflation in the
three best performing Member States;
Long-term interest rates close to the rates in the countries with
the best inflation results;
An annual budget deficit which does not exceed 3% of gross
domestic product (GDP) and total government debt which does
not exceed 60% of GDP or which is falling steadily towards that
figure;
Stability in the exchange rate of the national currency on
exchange markets The exchange-rate mechanism of the
European Monetary System requires this stability to be
demonstrated and sustained for two years.
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Stability and international recognition
Price transparency/comparisons/one
catalogue/bank account/potentially lower
interest rates – EU wide capital market?
Disadvantages – we probably know these
Cyprus and Malta to join in 2008
Baltic States moving towards criteria
Possible Hungary and Slovakia
EU thinks all new members in by early next
decade – out Denmark(?), Sweden – may be
a new referendum and UK
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Regional/Cohesion Policies
Converging economies
Economic independence
ECB transparency
Stability of Euro
Foreign Reserve holdings
Will it survive the current crisis?
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Taken as a single entity, the European Union
has the largest economy in the world, with an
estimated nominal GDP of €11.6 ($14.5)
trillion in 2006 accounting for 35% of world
GDP (the second largest economy is USA, with
a GDP of $13.2 trillion).
It appears that the EU has attained the
capacity for higher growth that is
historically due to the EU's new member
states potential to expand at a higher rate
than traditional industrial powers of Europe.
Possibility for a twin speed Europe?
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Differences between member states are also
significant. GDP per capita is often 10% to
25% higher than the EU average in the "older"
western member states, but only comprises
one-third to two-thirds of the EU average in
most eastern member states, as well as in
potential membership candidates such as
Croatia, the former Yugoslav Republic of
Macedonia and Turkey
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By comparison, United States GDP per capita
is 35% higher than the EU average: Japanese
GDP per capita is approximately 15% higher
The EU currently imports 82% of its oil and
57% of its gas, making it the world's leading
importer of these fuels
So, there is someway to go!
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After growing almost 3% as a whole in 2006
the EU economy is predicted to stay robust
well into 2008 with average growth over
those two years averaging over 2.5%
growth. Many economists agree the EU has
attained the capacity for higher growth than
historically due to the EU's new member
states potential to expand at a higher rate
than traditional industrial powers of Europe.
But some countries are more poorer – what
should be done about this?
Three new objectives
 Convergence (like old Obj 1: greater scope) RED on
MAP
 Competitiveness (old Obj 2&3, tie to Lisbon) BLUE
ON MAP
 Territorial co-operation (former Interreg) (and REC)
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A method based on what works: Programming,
Partnership and Decentralised management
Trying things out: then main streaming
Loans for the first time in the regulations
Making Europe and its regions a more attractive
place to invest and work
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expand and improve transport infrastructures
improve the environmental contribution to growth
and jobs
address the intensive use of traditional energy
sources
II) Knowledge and innovation for growth
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increase and improve investment in RTD
facilitate innovation and promote entrepreneurship
promote the information society for all
improve access to finance
III) More and better jobs
 attract and retain more people in
employment and modernise social
protection systems
 improve adaptability of workers and
enterprises and the flexibility of the labour
market
 increase investment in human capital
through better education and skills
 administrative capacity
 health and the labour force
50
47.4
45
2006
2013
40.4
40
35.7
32.1
35
30
25
20
15
10
9.9
6.6
6.5
5
0.9
6.4
5.6
6.1
1.5
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1A Competitiveness
1B Cohesion
2 Natural resources
3 Justice
4 Global role
5 Administration
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Does it work?
◦ across Member States yes
◦ within Member States less
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What will enlargement do (Poland 40 million, Spain
40 million)
◦ from 15 to 27 Member States and may be 30 soon
◦ new Member States are much poorer
◦ pressure on budget
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Causes friction between member-states
◦ Poor vs. rich
◦ South vs. North
◦ East vs. West
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Think the future of UK in the global
economy
Changes in P5 membership
Emergence of BRIC countries + Indonesia
Greater integration – probably wider and
not deeper
Will UK ever join Euro
How many more members could EU absorb?
Any questions?