Brussels, 19/02/2009 (Agence Europe) - In a communication it is expected to adopt on Friday 20 February, the European Commission explains that the EU has taken advantage of the two most recent phases of enlargement, and is culturally better off and better placed to tackle international competition and assume a greater role in the global economy. The two enlargements of 2004 and 2007 have proved a success for the new and older member states alike. The draft text obtained by EUROPE, explains that enlargement has “allowed for improvements to be made to economies and the quality of life, as well as new export and investment opportunities. By promoting a more efficient division of labour and improvements in the legal, regulatory and institutional environments, enlargement has enhanced the competitiveness and resilience of the EU economy as a whole”. The accession of 12 new member states has strengthened the EU but several challenges remain if full integration of the national economies and income convergence is to be ensured.
The Commission points out that the accession process has helped boost living standards in new member states by fostering economic and social cohesion in the EU. The Commission also indicates that income per capita rose from 40% of the old member states' average in 1999 to 52% in 2008. It considers that enlargement increased growth in the 12 new states by around 1.7 percentage points between 2000-08, which was also to the benefit of the old member states, which developed their trade and investment links (0.5 percentage points over the same period). Rapid trade integration promoted a division of labour and improved competitiveness inside and out the EU. In 2007, almost 80% of total exports from new member states went to the rest of the EU (19.5% of exports to other new members, as opposed to 13.25% in 1999). The increase in new member states' share of world trade also enabled the whole of the EU to contain reduction in its market share, resulting from the rapidly expanding share of emerging economies in world trade.
The economies of the new member states have been modernised rapidly and although agriculture and manufacturing industry still accounted for 4.5% and 21.75% of their GDP in 2006 (as opposed to 1.5% and 16.75% in the old member states), there is a trend towards a service-based and knowledge-intensive economy. (Services accounted for 56% of GDP in 1995 but accounted for 63% in 2006.) Investment in old member states has been a key driver in this transformation, particularly in the financial and banking sector. This transformation is also characterised by greater competitiveness (particularly in the telecommunications and postal sectors), although the application of competition law is still uneven. These investment opportunities also helped old member states improve their competitiveness and protect jobs on their own territory. The Commission explains that although adjustment in the short term did not come without a price, in many sectors such as machines, real estate, medical instruments, chemical products and tobacco, investment in new member states went hand in hand with job creation in old member states.
Workers in new member states also benefited from new job opportunities in their countries, as illustrated by the 3 million jobs created between 2003-07 and the fall in unemployment to rates similar to the rest of the EU (long term unemployment and skill mismatches still, however, persist). Migration of workers from new member states to labour markets in other countries did create problems in some of the new states (Cyprus, Lithuania, Poland and Romania), indicates the Commission, which considers, on the other hand, that the fears expressed in the older member states before enlargement with regard to mass immigration were not borne out. Only 3.6 million citizens from the 12 new states emigrated to old member states (1.6 million already had already emigrated by the end of 2003) and the figure is not expected to significantly increase with the lifting of restrictions in certain countries. Despite certain labour market difficulties in the countries concerned (especially the United Kingdom, Spain and Ireland), the Commission believes that the overall effect has been positive.
The financial crisis has seen a plethora of challenges for the economies of the new member states, some of which are particularly vulnerable due to their large current account deficits. In these countries, greater effort is needed to guarantee macro-economic and financial stability. The Commission says that completion of the internal market and implementation of reforms to modernise the economy (including the legal and public administration sectors) is needed, as well as a crucial increase in productivity. It also highlights a certain reform fatigue in new member states. Good budgetary policy and reform of the health, pensions and education systems are among the main stakes at play in the years to come. Although the 12 new member states have significantly benefited from funds from cohesion policy (transfers are equal to 2% of the Community's 2007 budget and are expected to reach 3% by 2013), their financial absorption capacity requires improvement in order to meet catch-up and economic competitiveness targets. (A.B./transl.rh)C