10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/31
Voting
For:33,against:59,abstentions:7.
Point5.3.1
Rewordasfollows:
'TheCommitteenoteswithconcernthehighcosttotheEAGGFbudgetresultingfromtheCouncil'sDecision
inDecembertomaintaintheswitchovermechanismforafurthertwoyears.ItisestimatedbytheCommission
thatthiscouldalreadyincreasespendingbyECU1,6billion,inexcessofthemonetaryreserve,andfurther
realignmentswillincreasethisfigure.TheCommitteeconsidersthatswitchovershouldberemovedatthe
earliestopportunity.'
Reasons
Retainingtheswitchoverisinfactoneofthemainreasonsfortheenormousincreaseinthecostofthis
package.
Theswitchoverisalsoacontinuedinflationarythreattofoodprices.Forinstanceofthe23%riseinUK
farmprices(sofaronlypartlyreflectedinretailprices)about15%isduetothedevaluationofthepound
whilemuchoftherestisduetothismechanism .
Voting
For:49,against:57,abstentions :10.
OpiniononRelationsbetweentheEuropeanCommunityandtheBalticStates
(93/C129/10)
On7February1992theEconomicandSocialCommitteedecided,inaccordancewiththe
fourthparagraphofArticle20ofitsRulesofProcedure,todrawupanOpiniononEC
RelationswiththeBalticStates.
TheSectionforExternalRelations,TradeandDevelopmentPolicywhichwasresponsible
forpreparingtheCommittee'sworkonthissubject,adopteditsOpinionon11March1993.
TheRapporteurwasMrPetersen.
Atits304thPlenarySession(meetingof25March1993),theEconomicandSocialCommittee
adoptedthefollowingOpinion,withnovotesagainstandtwoabstentions .
turiiigandrenewalprocessesintheBalticStates,with
particularreferencetofurtherconsolidationoftheir
political,economicandsocialrelationswiththeEuro­
peanCommunity .TheCommittee'sobservationsare
forthemostpartbasedontheinformationavailablein
early1993.PreliminaryRemark
TheEconomicandSocialCommitteehasconsidered
thequestionofreformprocessesincentralandeastern
Europeonanumberofoccasionsinthelastfewyears.
Itsmostrecent,detailedassessmentwassetoutinthe
twoAdditionalOpinionsontheEuropeAgreements
withPoland,Hungary,theformerCzechandSlovak
FederalRepublicandBulgariaandRomania(!).The
presentOwn-initiative Opinionexaminestherestruc­Summary
AlthoughtherelativelysmalleconomiesofEstonia,
LatviaandLithuaniadonothavethemarketpotential
ofmostoftheformerSovietRepublics,theyplayan
importantrole,particularlyinviewoftheirgeographi­
calposition,asabridgebetweenEastandWest(1.1).(*)OJNoC339,31.12.1991,p.44etseq.andOJNoC19,
25.1.1993,p.74etseq.TheCommitteealsorefersinthis
contexttoitsOpiniononeconomicandsocialorganizations
inthecountriesofcentralandeasternEurope—consultative
mechanisms (OJNoC19,25.1.1993,p.114etseq.).

NoC129/32 OfficialJournaloftheEuropeanCommunities 10.5.93
Thedevelopmentandconsolidationofdemocratic
structuresandthereciprocalopening-upofmarketsare
fundamentalrequirementsforclosercooperationwith
theCommunity'seasternneighbours.Inviewofthe
increasingworld-wideeconomicinterdependence ,and
thegrowingcomplexityofpoliticalandeconomicpro­
cesses—infieldssuchasthemaintenanceofpeace,
environmental issues,nuclearenergyandgeneticengin­
eering,tonamebutafewexamples—international
cooperationandcoordinationbasedonmutualtrust
arethemostimportantrequirementsofall(3.1).
Thequestionofthecompletewithdrawalfromthe
BalticStatesofthemilitaryforcesoftheformerSoviet
Unionremainsunresolved.Inspiteoftheappealby
theHeadsofStateorGovernmentatthe18thWorld
EconomicSummitinMunich,thedemandmadeatthe
SummitoftheConferenceonSecurityandCooperation
inEurope(CSCE)inHelsinkiandintensebilateral
negotiations,abreakthroughhasyettobeachievedon
thisthornyissue.IntheCommittee'sview,thestation­
ingofforeignmilitaryforcesintheBalticRepublics
continuestoconstituteagraveimpedimenttothetrans­
formationprocesseswhichhavebeensetintrain.The
CommitteecallsupontheCommunitytoofferitsser­
vicesasamediatorwithaviewtoresolvingthisintrac­
tableproblem(1.7/1.9).
TheCommitteeconsidersthatthereisaconsiderable
needtoeliminateeconomicandsocialimbalances
betweeneasternandwesternEurope.TheBalticStates
arefarfrombeingabletomasterthesechallenges
bythemselves;onlyiftheyreceiveeffectiveoutside
assistancewilltheysucceed(3.2).TheearliestpossibleconclusionofEuropeAgreements
withtheBalticStateswasfirstadvocatedbytheCom­
mitteesomemonthsago.Forbothpoliticalandecon­
omicreasons,theCommunitymustformcloserlinks
withtheseStatesandembedtheminpan-European
structures.TheCommitteefirmlysupportstheinten­
tionoftheDanishPresidencynotonlytoimplement
thetradeandcooperationagreementswithoutdelay
butalsotoexpandrelationswiththeBalticStateson
thebasisofagreementsassoonaspossible.Thisis,of
course,conditionalupontheseStates(a)reachingthe
'pointofnoreturn'ontheroadtowardsdemocracy
andthemarketeconomyand(b)pressingonsuccess­
fullywiththeprocessesofpolitical,socialandeconomic
renewal(3.9).
TheCommitteeunreservedlyendorsestheneedfor
consolidationofthepoliticalandeconomicfreedoms
whichareattheheartofassociation .Itisalsoessential
thatajointdeclarationofintentbemadestipulating
that:theprocessofestablishinganewstateandecon­
omicorderwillbebasedonrecognitionoftheruleof
law,respectforhumanrightsandtherightsofminoriti­
es;multi-partyelectoralsystemswithfreeanddemo­
craticvoting(basedonthesecretballot)willbeintro­
duced;theGovernmentswillpressaheadwitheconomic
liberalizationbasedontheprinciplesofthemarket
economy;andthatapolicyofsocialjusticewillbe
pursued(4.2).
TheCommitteefirmlystressestheneedforthepre­
ambletotheEuropeAgreementstoincludeprovision
forthesocialdimensionofthemovementtowards
EuropeanunificationandtomakereferencetotheEC
CharteronBasicSocialRightsforWorkers,adopted
by11MemberStatesattheEuropeanCouncilinStras­
bourginDecember1989.Offundamentalimportance
inthiscontextistheestablishment ofrelationsbetween
employersandemployeesasindependent'socialpart­
ners',whilstmaintainingtheroleandtheresponsibility
ofthepublicauthorities (4.3).
ThepreambletotheEuropeAgreementswiththethree
BalticStatesshould,liketheAssociationAgreements
alreadynegotiatedwitheasternEuropeancountries,
makereferencetothepossibilityofaccessiontotheEC
(4.4).
IntheCommittee'sview,politicaldialogueisthekey
elementintheEuropeAgreements.TheCommittee
firmlybelievesthatthedialoguewiththeBalticStates
hasnotprogressedaswellasthedifficultpolitical
andeconomicsituationintheseStatesdemands.The
Committeereiteratesitsproposalthatprovisionbe
madeinanadditionalarticleoftheTreaty—andnot
justinajointdeclarationbythecontractingpartiesto
theTreaty—forparticipationbytheeconomicand
socialinterestgroupsinthedialogueintheAssociation
Council;theCommitteealsoreiteratesitsproposal
thatan'AdvisoryCommitteefortheAssociation'be
establishedfollowingatransitionalperiod(3.8/4.5/4.7).
NewprovisionsinthemostrecentEuropeAgreements
stipulatethatrespectfordemocraticprinciplesandThethreeBalticeconomiesarecurrentlygoingthrough
themostdifficultphaseoftheprocessoftransformation
fromacentrally-planned toamarketeconomy.
Althoughtheoldsystemhaslargelycollapsed,thenew
systemcanonlycomeintoeffectgradually.Asaconse­
quencetheBalticStatesareexperiencingdownturnsin
economicgrowthtoanextentwhichcouldscarcely
havebeenforeseen,persistenthighinflation,growing
unemployment anddeclininglevelsofrealincome(2.3).
TheCommitteeunderlinestheneedtoincludea'social
dimension'intheformulationandimplementation of
economicpolicyfortheswitch-overtoamarketecon­
omy.Economic,financialandsocialpoliciescannot
beconductedinisolationfromeachother;market­
orientatedandsocially-orientated measuresmust
alwaysbepursuedintandem(2.4).
Thetradeandcooperationagreementsareanimportant
steptowardscloserrelationswiththeBalticStates.
However,inthefinalanalysisthetradeagreements
merelyconsolidatethedefactoprovisionsappliedto
importsfromallcountriesoftheGeneralAgreement
onTariffsandTrade(GATT).Seeninthislight,the
agreementsareofnomajortradevaluetotheBaltic
States(3.8).

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/33
humanrightsandthecontinuedimplementation of
marketeconomyreformsarefundamentaltothe
Association .TheCommitteeunreservedlywelcomes
thisadditiontotheAssociationAgreementsbutcalls
forinclusioninfutureofthefurtherstipulationthat
thesafeguardingofbasicsocialrightsandrespectfor
therightsofminoritiesshouldalsoberegardedas
fundamentaltoAssociation .Membersofminority
groupsshouldalsobegivenspecificallytargetedassist­
ance,e.g.financialassistanceinrespectofconferences,
languagecoursesandteachingmaterial(4.8).TheCommitteeendorsestheintegrationintheECof
legallyemployedworkersfromeasternEuropebut,in
viewofthecontinuingdifficultemploymentsituation
intheCommunity,itexpressesconcernabouteasing
cross-frontier accesstojobstooquickly.Itisalso
necessarytoaddresstheproblemofundeclaredworkers
which—despitethecriticismoftheCommittee—isnot
mentionedbyanyofthecurrentEuropeAgreements .
Inthefinalanalysis,whatisneededisaconvincing
conceptofthecross-frontierlabourmarketwhichopens
uprealisticprospectsforthecentralandeastEuropean
partiestotheAgreements (4.14).
TheEuropeAgreementsprovideforthephasedestab­
lishmentofafreetradezonewithintenyears.Under
theprovisionsoftheAgreements,theEuropeanCom­
munityagreestointroducefreetradeearlierthanwith
theAssociatedStatesofeasternEurope.TheCommittee
endorsesthisasymmetricalapproach,butalsocalls
upontheEuropeanCommunitytograntextensive
accesstoitsmarketforindustrialproductsassoonas
theAssociationAgreementcomesintoeffect(4.9).Withregardtotheagreementsontherightofestablish­
ment,theCommitteeunderscoresitsviewthatfreedom
ofestablishmentwillpromotethetransitiontoamarket
economyandhelptoensurethattheeconomiesofthe
partnercountriesofeasternandcentralEuropeare
modernandcompetitive .TheCommitteeis,however,
scepticalaboutpossibleprotectivemeasuresforfirms
inthepartnercountrieswhichsuffera'drastic'lossof
theirshareoftheirhomemarkets(4.15).
Inthelightofthemacro-economic importanceofser­
vicesandtradeinservices,theobjectiveofphased,
mutualliberalization oftradeinservicesshouldbe
resolutelypursued(e.g.intheAgreementswiththe
BalticStates)(4.16).TheCommitteefullyappreciatestheneedforexcep­
tionsinsectorsinwhichtheCommunityhasmajor
structuraladaptationproblems.Theymust,however,
bekepttoaminimum.TheCommunityiscommitted
toensureitsfreetradeagreementsareconsistentwith
GATTwhichmeansthatdutiesandotherrestrictive
measuresaffectingbilateraltradehavetobedismantled
virtuallyacrosstheboardwithinaspecifiedperiod
(4.11). ItwouldbeunrealistictoasktheBalticStates,inthe
courseoftheassociationnegotiations,toproducea
concreteprogrammefortheliberalizationofcapital
flows,givingfirmdatesforthefullliberalizationofthe
variouscategoriesoffinancialtransactions .Instead,
theCommitteeconsidersthatattheendofthefirst
transitionstagetheAssociationCouncilsshouldtake
uptheissueofliberalizationonceagainanddiscuss
furtherindividualsteps(4.17.2).TheCommitteehassetoutitsviewsonseveral
occasionsonthesupportingmeasuresdesignedtofacili­
tatetheestablishment ofafreetradeareaandhas
constantlyexpressedsupportinprincipleforthepro­
posedpackageofmeasures(4.13).TheCommittee
attachesparticularimportancetoconsultationonce
casesofdumpinghavebeenidentifiedandcallsonce
againforGATTcodes(onanti-dumpingmeasuresand
subsidies)tobeobservedintheirentirety.Associated
StatesineasternEuropeshouldalsoenterintoabinding
commitmenttorespectECrulesonsubsidiesunre­
servedly(4.13.1).TheCommitteeexpectsthecompetitionprovisionsof
AssociationAgreementswiththeBalticStatestobe
likewisebasedonArticles85,86and92oftheEEC
Treaty.Itisessentialthatthereshouldbeaclear
provisiononthetransparencyofstateaids.Inthis
connection,theCommitteerepeatsitsrecommendation
thattheAgreementsshouldincludethestateaidcon­
trolssetoutinArticle93oftheEECTreaty.Infuture,
stateaidsshouldnotartificiallypreserveantiquated
structures,butshouldpromotestructuraladjustment
andfurthertheestablishment ofnewindustrialstruc­
tures(4.18).TheCommitteeiscriticalofthe(veryrestrictive)rules
oforiginsetoutinthetradeprovisionsoftheEurope
Agreements .Inthelightofthedivisionoflabourin
Europe,itisessentialtohaveauniformsetofrulesof
originwhichwillapplytotheStatesoftheEuropean
FreeTradeAssociation (EFTA)aswellasassociated
centralandeasternEuropestates.TheCommittee
thereforeurgesthattheEuropeanEconomicArea(EEA)
provisions,togetherwithanalternativepercentage­
basedcriterion,beincorporatedinalltheEuropeAgree­
ments('pan-European 'cumulation )(4.13.3).TheCommitteehasrepeatedlycalledfortheintroduc­
tionofbindingprovisionsstipulatingwhichlegaland
administrative provisionsoftheAssociatedStates
shouldfirstbeadjustedtoCommunitylaw.TheCom­

NoC129/34 OfficialJournaloftheEuropeanCommunities 10.5.93
mitteeispleasedtonotethattheCommission ,too,is
finallyreadytoconsidertheideaofsettingpriorities.
Thelistofprioritiesshouldincludeenvironmental law
andtheprotectionofworkersattheworkplace,in
additiontocustomslaw,competitionlawandthelaw
onintellectualproperty.Lithuaniamustalsoundertake
toapplytheEuratomsafetyprovisionstoitsnuclear
powerplantinIgnalinaforthwith(4.19).
Asregardseconomiccooperation,theCommitteehas
well-foundeddoubtsastowhethertheECbodieswill
beinapositiontoinitiateconvincingmeasuresinall
thelistedfieldswithinaspecifiedperiodoftime.The
Committeethereforecallsforprioritiestobeestab­
lishedinthisfield,too.Animportantprerequisitefor
therealizationofthestructuraladjustmentprocessesis
theestablishmentanddevelopmentofinfrastructure
whichmatchesdemand.TheCommitteealsoproposes
thatconsideration begiventohowtasksaretobe
allocatedbetweentheECMemberStatesandtheEC
Commission .Thewidevarietyofadvisoryassistance
providedbytheECMemberStates,theNordicStates
andtheECCommissionshouldbecollated,assoonas
possible,atEClevelandacoordinatingcommittee
shouldbesetuptocoordinatetheassistance (4.21/
4.22).TheBalticStatessucceededafterthefirstWorldWar
infreeingthemselvesfromRussiansovereignty .Apeace
treatywassignedbetweenEstoniaandSovietRussiain
February1920andtheTreatieswithLithuaniaand
Latviaweresignedinmid-July1920andatthebegin­
ningofAugust1920,respectively .AllthreeRepublics
becamemembersoftheLeagueofNationsandthere­
foreobtainedinternationalrecognition .Itwas,how­
ever,extremelydifficultforthesenewlyestablished
statestoconsolidatetheirinternalpoliticalsituation.
Althoughthenewconstitutionsprovidedforpluralist
parliamentary democracies,unfavourable initialcir­
cumstances,bothpoliticalandeconomic,impededthe
establishmentofinternalstructures.Thefragmentation
ofpoliticalpartiesmadeitdifficulttoreachmajority
decisions,ledtofrequentchangesofgovernmentsand
ultimatelycreatedconditionsconducivetotheemerg­
enceofanti-democratic forces.Grossinfringementsof
civilrightsandtherightsofminoritiesandabusesof
powerinevitablyaccompaniedthesedevelopmentsand
itwasonlyamatteroftimebeforeparliamentary
democracywasreplacedbydictatorships .InDecember
1926therewasamilitarycoupinLithuania,whilst
democraticgovernmentcametoanendinEstoniaand
Latviaaroundthemiddleof1934.TheBalticStates'
hardwonindependencewasalsolostjustafewyears
later.ThedemiseofBalticindependencewasushered
inbytheill-famedNon-Aggression PactbetweenHitler
andStalin(23August1939).Asecretprotocoltothe
PactstipulatedthatEstoniaandLatviawouldform
partofthesphereofinterestoftheSovietUnionand
twosubsequentsupplementsmadethesamestipulation
inrespectofLithuaniaandEasternPoland.Abitter
consequenceofthisagreementwastheoccupationby
theRedArmyoftheBalticStatesinthesummerof
1940andtheoverthrowoftheirgovernments .German
troopsoccupiedtheBalticStatesonlyafewweeksafter
theoutbreakofthewarbetweenGermanyandthe
SovietUnion,andremainedthereuntilthereconquest
bytheRedArmyintheautumnof1944.Turningtothefieldoffinancialcooperation,theCom­
mitteewoulddrawattention,onceagain,totheneed
toensurethatallaidiscontinuouslymonitored—both
whenitisallocatedandwhileitisbeingspent—and
coordinated .Theaidshouldbemonitoredonthebasis
ofbindingcriteria.Whenaidisgrantedattentionmust
alsobepaidtoensuringthat(a)civilrightsarerespected
inthebeneficiarystateinaccordancewithinternational
practice,and(b)thatminoritiesareaffordedastatus
whichreflectstheneedforpoliticalandsocialstability
and'goodneighbourlyrelations'(4.2.5/4.2.6).
1.Theroadtoindependence
1.1.WhilsttherelativelysmalleconomiesofEstonia,
LatviaandLithuaniadonothavethemarketpotential
ofmostoftheformerSovietRepublics,theyneverthe­
lessplayanimportantrole,particularlyinviewoftheir
geographicalposition,asabridgebetweenEastand
West.TheBalticStateshavetraditionallyhadclose
cultural,economicandsociallinkswiththestatesof
northernandwesternEuropeandarepre-destinedto
playapivotalroleinthedevelopmentofcloserrelations
betweenEastandWest.1.3.AlthoughtheBalticStatesneverconsidered
themselvestobepartoftheSovietUnion,halfacentury
wastoelapsebeforetheyweretoregaintheirindepen­
dence.'Perestroika'and'Glasnost'playedanextremely
importantpoliticalroleinthiscontextastheymadeit
possibletoformulateprinciplesofgenuinedemocracy
intheUSSRandestablishanewpoliticalscene.In
1986,the'Helsinki86'groupwassetupinLatvia;the
groupbaseditspoliticaldemandsontheFinalActof
theHelsinkiConvention .Thesedemandsincludedthe
re-establishment oftheindependence oftheBaltic
States,theintroductionofgenuinedemocraticprocesses
andunconditional respectforhumanrights.Justtwo
yearslaterpopularfrontmovementsweresetupinall
threeBalticStates—SajudisinLithuania,theTautas
FrontinLatviaandRahvarinneinEstonia.InMay
1989theparliamentsofthesethree'organizationsof
thepeople'setupthe'BalticAssembly',thecentral
politicalobjectiveofwhichwastoachieve'self-determi­
nationandindependencefortheBalticStateswithina
neutral,demilitarizedzoneinEurope'.On16Novemb­
er1988Estoniaadopteditsdeclarationofsovereignty .
LithuaniaandLatviafollowedsuiton18Mayand28
July1989respectively .Itshouldbenotedthatpartsof1.2.Thewesternworldhasfollowed,withconsider­
ablesympathyandconcern,thestruggleoverthedec­
adesbytheBalticStatesfortherightofself-determi­
nation—asembodiedintheUNCharterandtheFinal
ActoftheHelsinkiConvention—andindependence .

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/35
theCommunistPartybrokeawayfromtheCommunist
PartyoftheSovietUnionatanearlystageandsetup
independentpartieswhichalsoplayedanactiverolein
thepopularfrontmovements .
1.4.Tomarkthe50thanniversaryoftheHitler­
StalinPacton23August1989,thepopularfrontorgan­
izationsintheBalticStatesorganizedtheformationof
ahumanchainstretchinguninterruptedfromTallinvia
RigatoVilnius.Overamillionpeopletookpartin
thisdemonstration demandingtherestorationofthe
sovereigntyoftheBalticStates.Shortlyafterwards,on
11March1990,theHighCouncilofLithuaniadeclared
thecountry'sindependence .AttheendofMarch1990
theHighCouncilofEstoniaannouncedthatthecountry
wouldbecomeindependentfollowingatransitional
periodandon4May1990Latviafollowedsuit.These
declarationsprovokedbitterresistanceinMoscowand
ledinevitablytoeconomicsanctionsandmilitaryescal­
ation.TheEuropeanCouncilrightlyexpressedits'deep
concern'atthecontinuedactsofintimidationandviol­
encewhichhadrecentlyoccurred.TheEuropean
CouncilurgedtheSovietauthorities'toputastopto
allsuchactsandactivitiesf1).1.7.Thequestionofthecompletewithdrawalfrom
theBalticStatesofthemilitaryforcesoftheformer
SovietUnionremainsunresolved.Inspiteofintense
bilateralnegotiations,abreakthrough hasyettobe
achievedinthisthornyissue.Atthe18thWorldEcon­
omicSummitinMunich,theHeadsofStateand
Governmentcalledforaswiftagreementtobereached
inthecurrentnegotiationsonatimetableforthewith­
drawaloftroops(-*).Thisappealhadnoperceptible
effect.TheCSCESummitinHelsinkialsocalledupon
theStatesinvolved'toconclude,withoutdelay,appro­
priatebilateralagreements,includingtimetablesforthe
early,orderly,andcompletewithdrawalofforeign
troopsfromtheterritoriesoftheBalticStates'(4).This
appeal,too,hassofarmetwithlittlesuccess.
1.8.AfewweeksaftertheCSCESummit,Russiaset
outitsviewsonfurthertroopwithdrawalsinanine­
pointprogrammewhichendeavouredtoprovidea
'packagesolution'.Thedemandsrangedfrompartici­
pationinthecostsofrehousingreturningsoldiersto
socialsecurityprovisionsforretiredofficersandtheir
familieslivingintheBalticStates,realprotectionfor
Russianminoritiesandrenunciation ofterritorial
claims.Itwasalsoemphasizedthatanumberofstra­
tegicbasesintheBalticStates,such.asSkrundaand
LiepajainLatviaandPaldiskiinEstonia,wouldhaveto
remaininRussianhandsforthemoment.Thebilateral
negotiationssufferedafurtherset-backattheendof
October1992whentheRussianPresidentordereda
halttotroopwithdrawalsfromtheBalticStates.A
numberofofficialexplanationsweregivenforthis
decision,themainonebeingtheaccusationthatthe
civilandbasicrightsoftheRussianminoritiesinthe
threeBalticStateswereconstantlybeinginfringed.With
aneyetotheCongressofPeople'sDeputies,internal
politicalreasonsalsoprobablyplayedanimportant
rolehere;postponement ofthetroopwithdrawalwas
fullyinaccordancewiththewishesofpublicopinion
inRussia.Fromtheexternalpoliticalviewpointthe
decisiontakenbytheRussianPresidentmayhaverep­
resentedatestdesignedprimarilytogaugehowserious
werethedeclarationsonthatsubjectmadebytheWest
atconferencessuchasthoseinMunichorHelsinki.
TheangryreactionswhichgreetedthePresident'sorder
causedRussiatolosenotimeinissuingconciliatory
declarationsthattheprincipleoftroopwithdrawal
remainedintactandtherewasnointentionwhatsoever
ofestablishingalinkbetweentroopwithdrawalsand
allegedinfringementsofhumanrights.
1.9.IntheCommittee'sviewthestationingofmili­
taryforcesfromtheformerSovietUnionintheBaltic
Statescontinuestoconstituteagraveimpedimentto
thetransformation processeswhichhavebeensetin
train.TheCommitteefirmlybelievesthat,aspartof
themeasurestoprovidefinancialsupportforRussia,a
specificfundshouldbesetupwithoutdelaytohelpfund
thewithdrawalofRussianforces,therebyremoving1.5.Finally,on12September1990,whentheTreaty
ontheReunificationofGermanywassignedinMos­
cow,theBalticStatesappealedtothegreatpowers
totakeuptheissueofthere-establishment oftheir
independence .'Thisisbynomeansmerelyaninternal
matterfortheSovietUnion.Itisaninternational issue
whichmustberesolvedininternational bodies...There
isnoquestionofbuildingthe«commonEuropean
house»aslongasthethreeBalticStatesremainoccu­
pied...Everynationhastherighttodetermineits
destiny.Touseagraphicterm,thenationsoftheworld
mustneverberegardedastradegoods'(2).
1.6.Inearly1991thepopulationoftheBalticStates
voteddecisivelyinthreereferendaforwithdrawalfrom
theSovietUnion.Thepeopleencouragedtheirgovern­
mentstocontinuealongtheroadtoindependenceand
toplacetheBalticquestionontheinternationalstage.
Formalrecognitionofthethreerepublicsbythewestern
statesdid,however,taketime.Itwasonlyon27August
1991,afterthefailureoftheMoscowcoupd'etat,that
thetwelveECMemberStatesrecognizedtheBaltic
States.TheECMemberStatesatthesametimeaffirmed
theirintentiontoenterintodiplomaticrelationswith
thethreeBalticStatesforthwith .Somedayslaterthe
USAfollowedtheexamplesetbytheECMember
States.Thelong-awaitedendorsementoftheSoviet
Unionwasalsogivenatthesametime.Theindepen­
denceofEstonia,LatviaandLithuaniawasapproved
inadecreebyPresidentGorbachov,theCongressof
People'sDeputiesandtheCouncilofState.
(■')EconomicSummitinMunich.MeetingofthesevenHeadsof
(')EuropeanCouncilSN/151/2/91. StateorGovernmentfrom6to8July1992.Chairman's
(2)Quotationfrom:KLudwig,DasBaltikum:Estland,Lettland,declarationof7July1992.
Litauen,2ndrevisededition,Munich,Beck,1992. (4)CSCHelsinkiSummitDeclarationof10July1992.

NoC129/36 OfficialJournaloftheEuropeanCommunities 10.5.93
thetraditionalcentrally-managed channelsoftrade
havemadeitincreasinglydifficultfortheBalticStates
toselltheirproducts,bothontheirhomemarkets
andinforeignmarkets.Theresultantslumpinoverall
economicactivitywasmuchmoreseverein1992than
hadbeengenerallyexpected.oneofthefundamentalimpedimentstothecomplete
withdrawaloftheforces.Onepossiblecourseofaction,
whichwouldbeinaccordancewiththemotioncarried
intheAmericanSenateinJulylastyear,wouldbeto
maketheprovisionofeconomicassistancetoRussia,
afteratransitionalperiod,contingentuponclearpro­
gressbeingmadeinthewithdrawalofforeignforces
fromtheBalticStates.TheECshouldalsoindicateits
unconditionalreadinesstoactasamediatorwithregard
tothisthornyprobleminordertoconsolidatethe
establishment ofthenewdemocraciesandtoremovea
potentialpoliticalthreat.
2.Macroeconomic trends2.2.1.InLithuania,realGDPdeclinedbysome40%
in1992,ontopofthefallofalmost13%recordedin
1991.Industrialoutputwasatleast50%belowthe
previousyear'slevel,withthehighestfallsoccurringin
thefollowingindustries:oilrefining,thetimber,pulp
andpaper-making industryandmechanicalengineer­
ing.TheInternationalMonetaryFundconsidersthat
theseriousworseningofthetermsoftradeoftheBaltic
StateswasamajorfactorinthedeclineofGDP.The
failureonthepartofRussiatohonouritssupply
commitments andtheprejudicialclearingandbank
arrangementsimposedbyMoscowfurtherexacerbated
thesituation.Thefallinoutputwasalsoreflectedin
thedeterioration ofthelabour-market situation.Inthe
secondhalfof1992,inparticular,thejoblesstotal
increasedatamorerapidrate.Inflation,whichgained
furthermomentumin1992,isafurthermatterofcon­
cern—theaveragerateofinflationfortheyearasa
wholeexceeded1000%.2.1.Initsmostrecentmacroeconomic assessmentof
centralandeasternEurope,theOECDreachesanum­
berofverydifferentfindings(1).Insomestates,such
asHungary,PolandandtheformerCzechandSlovak
FederalRepublic,thereareincreasingsignsthatthe
contractionprocesshascometoahaltandtheinflation
rateisdeclining.Themacroeconomic stabilizationpro­
cessisprovingtobemoredifficultinBulgariaand
Romania.TherepublicsoftheformerSovietUnionare
trailingwaybehind,sincetheconditionsforasuccessful
stabilizationpolicydonotyetexistinthesecountries.
Thelackofclarityastotheextentandpaceofmarket­
economyreforms,economicpolicyvacillationand
attemptsbytheformer'Nomenclatura 'and—notleast
thoseemployedintheStatecombines—toholdback
reformsarecausingtensionanduncertaintyandmaking
anyattempttoquantifymacroeconomic trendsaspecu­
lativeexercise.Theonlyconclusionwhichcanbe
realisticallymadeisthatin1993outputiscontinuing
todecline,unemployment isincreasing,inflationina
numberofrepublicsiscontinuingtorocketandthe
Russianroubleiscontinuingtodepreciate.Againstthisgloomyeconomicandsocialbackground,
theLithuanianStatePresident,AlgirdasBrazauskas,
definedhiseconomicpolicystandpointandcalledfor
theeconomicreformprocesstobecarriedforward
'withduecaution'.InthePresident'sviewoverhasty
reforms,inparticulartheprecipitateclosureofagricul­
turalcooperatives,hadplayedamajorpartinbringing
aboutthedramaticfallinproduction .PresidentBrazau­
skaswishestoregainaccesstolostmarketsinthe
independentrepublicsoftheCIS,bringthenegotiations
withRussiaoveroilimportstoasuccessfulconclusion
andincreaseagriculturalsubsidies.2.2.Thepooreconomicsituationintherestofthe
formerSovietUnionhasadamagingeffectonthe
economiesoftheBalticStates,sincefordecadesthey
werepoliticallyandeconomicallyintegratedwiththe
SovietUnionandderivedover60%oftheirnational
incomefromtradewithit.TheBalticStatesimported
commodities ,energyandchemicalrawmaterialsat
favourablepricesfromotherSovietRepublicsand
exportedmachinery,foodandconsumergoodstothem
inexchange.Theapplicationofworld-market prices
hasbroughtaboutacleardeteriorationinthetermsof
tradeoftheBalticStates;importedcommoditiesand
energyhaveincreasedinprice,whereasexportsof
machineryandconsumergoodsfetchlowerprices
becauseoftheirrelativelylowqualityandlowlevelof
technology.Thefurtheropening-upoftheirmarkets
totradewithwesterncountries,problemswiththe
competitiveness oftheirproductsandthecollapseof2.2.2.AlthoughthegrossnationalproductofLatvia
decreasedby'only'3,5%in1991—amuchsmaller
reductionthanwasthecaseinLithuania—in1992the
fallislikelytoreachdoublefigures.Initialestimates
suggestthatthedeclinewillbeoftheorderof30%.
Thisestimateisbackedupbythedropinindustrial
outputofmorethan30%,withthefallinproduction
beingparticularlynoticeableinthemechanicalengin­
eering,metal-processing ,wood-processing andfood
industries.Increasingdifficultiesasregardssuppliesof
rawmaterials,bottlenecksinthesupplyofenergyand
marketingproblemsincountriestotheEast(causedby
factorssuchasthehighrateofexchangeoftheLatvian
roubleagainsttheCIScurrencies)arefundamental
reasonsforthedeclineinproduction.Thesituationwas
exacerbatedbyalongperiodofdroughtwhichcaused
harveststoplummet.Unemployment didnotincrease
asrapidlyaswouldhavebeenexpectedfromthedecline
inmacroeconomic activity.Thelowrateof(registered) (MOECDEconomicOutlook,No52—December1992

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/37
advisersshouldbearinmindthateconomictheory
andpastexperiencedonotprovidepanaceasforthe
problemswithwhichthesecountrieshavetocontend
intheswitch-overfromacentrally-planned toamarket
economy(1).Economic,financialandsocialpolicies
cannotbeconductedinisolationfromeachother;mar­
ket-orientated andsocially-orientated measuresmust
alwaysbepursuedintandem.TheCommitteehas
frequentlydrawnattentiontothefactthat,giventhe
socialandculturalconditionsprevailinginEurope,the
establishment ofan'economicarea'whichdoesnot
alsocomprisea'socialarea'cannotbecontemplated .
Thebeliefthatitispossibletoestablishaneffective
marketeconomywithoutasocialdimensionisarecipe
forfailure.Thismessageshouldbetakentoheartby
politiciansinthenewlyemergingdemocraciesincentral
andeasternEuropebutitisamessagewhichapplies
equallybeyondtheconfinesofthesecountries.unemployment (2,3%)concealslatentlabour-market
problems.Therewillbeasustainedincreaseinunem­
ploymentoncelargestateenterpriseshavebeenprivati­
zedand'hidden'unemployment hasbeenbroughtinto
theopen.InLatvia,too,pricesincreasedatafasterrate
inthefirstpartof1992buttherateofincreasefell
slightlylaterintheyearasaconsequenceofthedecline
inrealwages.
2.2.3.TurningtoEstonia,thisRepublic'sGDP,
measuredinrealterms,declinedbyapproximately 13%
in1991andamuchlargerfallofsome25%isexpected
tohaveoccurredin1992.Industrialoutputwassome
40%belowthefigurefortheprecedingyear,with
higherthanaveragefallsinproductionbeingrecorded
inthepulp-andpaper-industry ,thebuilding-material
industry,mechanicalengineering,metalprocessingand
thechemicalindustry.Marketingproblemsandbottle­
necksinthesupplyofrawmaterialsarecontributory
factorsinthefallinoutputinEstonia,asintheother
BalticStates.IncontrasttoLithuaniaandLatvia,which
sendbyfarthegreaterpartoftheirexportstoCIS
Republics,Estoniahasbeenabletofindnewmarkets
intheindustrializedstatesoftheWestand,inparticu­
lar,toexpanditstradewithFinland,therebypartially
offsettingthelostoutletsintheCIS.Theofficiallevel
ofunemployment inEstonia,too,isfarlowerthan
wouldhavebeenexpected,giventhesharpdeclinein
overalleconomicactivity.Theincreaseintherateof
inflation,whichcontinueduncheckedforthefirsthalf
of1992,slowedsignificantlyfollowingtheintroduction
oftheEstoniancrown,whichhassofarhadafixed
exchangerateagainsttheDM.Tightmonetarypolicy
hasbeenadecisivefactorinthissuccessandtheincreas­
inglywell-managedbankingsystemmadeasignificant
contribution .Atthebeginningof1993themonth-on­
monthrateofinflationinEstoniawasaround3,5%
—thelowestrateofalltheBalticStates.
2.3.Analysesoftheoveralleconomicsituationin
theBalticStatesdemonstrateonefactalltooclearly:
thethreeBalticStatesaregoingthroughthemost
difficultphaseofthetransitionfromacentrally-planned
toamarketeconomy.Althoughtheoldsystemhas
largelycollapsed,thenewsystemcanonlycomeinto
effectgraduallybecause,interalia,ofthedifferenttime­
lagsinrespectofthevariouspartsofthereformprocess.
AsaconsequencetheBalticStatesareexperiencing
downturnsineconomicgrowthofaseveritywhich
couldscarcelyhavebeenforeseen,continuinghigh
inflation,growingunemployment anddeclininglevels
ofrealincome.TheinhabitantsoftheBalticStates
undoubtedlyfindthissituationhardtounderstandand
evenhardertoendure.Itisconfidentlyassumedinthe
West,however,thatpeopleinthestatesundergoing
reformarepreparedtobearpatientlytheconsiderable
burdensimposedbytherenewalandrestructuringpro­
cesses,bothnowandintheimmediatefuture.The
resultsofthemostrecentelectionsinthestatesbor­
deringtheCommunitytotheeastcan,however,be
interpretedascarryingadifferentmessage.
2.4.TheCommitteewouldonceagainunderlinethe
needtoincludea'socialdimension'intheformulation
andimplementation oftheeconomicpolicyforachiev­
ingaswitch-overtoamarketeconomy.Western3.TradeandeconomiccooperationwiththeBaltic
States
3.1.AstheCommitteepointedoutinitsOpinionon
theEuropeAgreementswithPoland,Hungaryandthe
formerCzechandSlovakFederalRepublic,thedevelop­
mentandconsolidation ofdemocraticstructuresand
thereciprocalopening-upofmarketsarefundamental
requirementsforclosercooperationwiththeEC'seast­
ernneighbours.Cooperation isthebestandmost
reliablemeansofestablishing,consolidatinganddeep­
eningtrustbetweenstates.Inviewoftheincreasing
world-wideeconomicinterdependence ,andthegrow­
ingcomplexityofpoliticalandeconomicprocesses—in
fieldssuchasthemaintenanceofpeace,environmental
issues,nuclearenergyandgeneticengineering,toname
butafewexamples—internationalcooperationand
coordinationbasedonmutualtrustareatoppriority.
Unilateralactionbyindividualcountrieshasforalong
timeofferednoprospectofsuccess.Thenumerous
possibilitiesforclosercooperationbetweenEastand
Westwere,however,notexploitedfordecadesbecause
oftheheavyburdenofideology,powerstructuresand
attitudeswhichimpededEast-Westrelations.
3.2.TheCommitteeconsidersthatthereisanurgent
needtoeliminateeconomicandsocialimbalances
betweeneasternandwesternEurope.Thenewdemoc­
raciesarefarfrombeingabletomasterthesechallenges
bythemselves;onlyiftheyreceiveeffectiveoutside
assistancewilltheysucceed.ForthisreasontheCom­
mitteehasrepeatedlyhighlightedasapositivestepthe
factthattheEuropeanCommunity—anditsMember
States—havejoinedotherwesternindustrialized
nationsinsupportingandencouragingthenecessary
cooperationprocessesinmanyways.Aboveall,itis
incumbentontheCommunitytopromotetheimprove­
mentofinfrastructure inthesecountriesinorderto
speedupeconomicrestructuringandstrengthenthe
processofrenewal.
()Seethe61stAnnualReportoftheBankforInternational
SettlementsinBasel,June1991.

NoC129/38 OfficialJournaloftheEuropeanCommunities 10.5.93
cooperationandcooperationintheculturalsphere'(*).
InotherwordstheEuropeanCouncilwascallingfor
anagreementwhichwentalotfurtherthantheexisting
tradeandcooperationagreement.Bearinginmindthe
sweepingpoliticalandeconomicchangesthathave
takenplaceintheformerSovietUnionsincethen,the
Councilwillsurelybewillingtogomuchfurthernow.
Timewilltellwhetherthepartnershipandcooperation
agreementswiththeindependentstatesoftheformer
SovietUnionsatisfythisrequirement .Negotiations
startedattheendof1992andtheECconsidersthat
theagreementsshouldsetouttheprovisionsgoverning
'awiderangeofpolitical,economicandtraderelations'
betweenthetwoparties.Supplementary provisionsare
tobedrawnupcoveringthepoliticaldialogueand
culturalcooperation .3.3.TheEFTAStatesarecontinuallyextendingand
deepeningtheirlinkswiththenewdemocraciesincen­
tralandeasternEuropeandthesemovesontheirpart
shouldbewelcomed.TheNordicStatesinparticular
—which,inadditiontothefourEFTAStates,also
includeDenmark—haveastrongfeelingofsolidarity
withtheBalticStates,andtheyplayedadecisiverole
incallingfortheirindependence .TheNordicStates
pointedoutatanearlystagethatthedemocratization
ofinternational relationswasessentialifoursmaller
neighboursineasternEuropeweretobegiventhe
chance—withdueregardtotheirexistinglinksand
theirroomformanoeuvre—toplayanactivepartin
theshapingofrelationshipsinEuropeandinthecon­
structionofthe'CommonEuropeanHouse'.TheEFTA
StatessigneddeclarationsoncooperationwithEstonia,
LatviaandLithuaniainearlyDecember1991.The
contractingpartiespledgedtoexaminewaysandmeans
ofextendingandliberalizingtheirtraderelations,acce­
leratingthedevelopmentofeconomicandindustrial
cooperationandpreparingthegroundfortheestablish­
mentoffreetradeandtheconsolidation oftheBaltic
States'economicrestructuring .
3.4.Theestablishment oftheBalticCouncilisalso
regardedasaveryimportantstep.ThisCouncil,the
establishmentofwhichwasagreedonattheirmeeting
inCopenhagenatthebeginningofMarch1992bythe
foreignministersofthestatesborderingontheBaltic,
isseenasaregionaldiscussionforum.Particular
emphasisisplacedondemocraticinstitutions,economic
andtechnicalassistance,humanitarian issues,health,
environmental protection,energy,transport,communi­
cations,culture,educationandtourism.3.7.WhiletheBalticStateswerepartoftheSoviet
Union,thetradeandcooperationagreementwiththe
USSRprovidedtheframeworkfortheirtradeandecon­
omicrelationswiththeEuropeanCommunity .How­
ever,immediatelyaftertherestorationoftheBaltic
States'independence ,negotiationscommencedonnew
tradeandcooperationagreementsandthesewere
signedasearlyas11May1992.Theagreementswere
endorsedbytheEuropeanParliamentandtheCouncil
ofECExternalAffairsMinistersinDecember1992.
Themainpillarsoftheseagreementsare,inthefieldof
trade,thegrantingofmost-favoured-nation treatment
and,inthefieldofcommercialcooperation,regulations
andfacilitiestopromotetheactivitiesofeconomic
operators (businessmen )onabasisofnon-discrimi­
nationandreciprocity.Asregardseconomiccooper­
ation,themainobjectivesoftheagreementsareto
reinforceanddiversifyeconomiclinks,bringabout
economicdevelopment ,openupnewsourcesofsupply
andencouragescientificandtechnologicalprogress.
Closelylinkedtotheseagreements—andpublishedon
thesameday—wasaJointDeclarationonPolitical
Dialogue,theaimofwhichistoreinforceandintensify
mutualrelationsinthepolitical,economicandcultural
fields.3.5.ThesigningoftheJointDeclarationbythe
CommunityandtheCouncilforMutualEconomic
Assistance(Comecoq)inLuxembourgon25June1988
wasamilestoneontheroadtowardsnormalization of
theEuropeanCommunity'srelationswiththecountries
ofcentralandeasternEurope.Theestablishmentof
diplomaticrelationsandtheconclusionoftradeand
cooperationagreementswithoureasternEuropean
neighboursareakeypartoftheEuropeanedifice.The
liberalizationofECimportsandthephasedabolition
ofquotarestrictionsby1995areattheheartofthese
agreements .3.8.TheCommitteeseesthesefirst-generation agree­
mentsasanimportantsteptowardscloserrelations
withtheBalticStates.However,itwouldaddthat
inthefinalanalysistheagreementsontrademerely
consolidatethedefactoprovisionsapplyingtoimports
fromallGATTcountries.Seeninthislight,theagree­
mentsareofnomajortradevaluetotheBalticStates.
Therewouldseemtoberoomforimprovement inthe
politicaldialogue,too.TheCommitteeisconvinced
thatthedialoguehasnotprogressedaswellasthe
difficultpoliticalandeconomicsituationintheBaltic
Statesdemands.OccasionalmeetingswithMEPsor3.6.TheagreementwiththeUSSRcoveringtrade
andcommercialandeconomiccooperationwassigned
on18December1989andenteredintoforceon1April
1990.Justafewmonthslater,theEuropeanCouncil
requestedtheCommissionto'explorewiththeSoviet
authoritiestheideaofamajoragreementbetweenthe
CommunityandtheUSSR,encompassing apolitical
dialogueandcoveringallaspectsofclosereconomic (!)EuropeanCouncil,SN/428/90.

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/39
withleadingCommissionrepresentatives arenot
enough.Muchmoreshouldbeexpectedofapolitical
dialoguewhichisdesignedtoreinforceandintensify
mutualrelationsinthepolitical,economicandcultural
fields.AccordingtotheCommittee,thepoliticaldia­
loguemustbeadynamicandintegralpartofthe
agreements .Itmustnotdegenerateintoanemptyfor­
mula.Theneedtoavoidsuchanoutcomeisallthe
morepressinginviewofthefactthatbothsideshave
expresslyagreedthat'respectforthedemocraticprin­
ciplesandhumanrightsestablishedbytheHelsinki
FinalActandtheParisCharterforaNewEurope
shouldinspirethedomesticandexternalpoliciesof
thePartiesandconstitutesanessentialelementofthe
agreements'(1).talksandtoprovideanswerstospecificquestions,but
up-to-datereferencematerialon,forexample,thestate
ofthenegotiationsonAssociationAgreementswas
extremelyinadequate.TheCommitteeregardsthisas
anobjectivethreattoitsrighttodrawupOwn-Initiative
Opinions.Furthermore ,theCommitteehadtoreco­
gnizethattheCommissionwasveryunwillingtoincor­
poraterecommendations bytheCommitteeinthenego­
tiatingbriefandtohavethemendorsedbytheCouncil.
TheCommitteethereforewishestosubmititsobser­
vations(includingcriticisms)beforenewguidelinesfor
negotiationsonEuropeanAssociationAgreementsare
finalized.Italsowishestoinformpotentialnegotiating
partnersineasternEurope—inparticulartheGovern­
mentsoftheBalticStates—oftheviewsofECeconomic
andsocialinterestgroupsonindividualaspectsofthe
agreements .TheCommitteeassumesinthiscontext
thatthecommonframeworkonwhichtheearlierEuro­
peAgreementsarebasedwillcontinuetobeused.This
frameworkhasproveditsworthandissufficiently
flexibletoenableproperaccounttobetakenofthe
respectivesituationintheindividualStatesandtheir
respectivepriorities.
Preamble3.9.TheearliestpossibleconclusionofEurope
AgreementswiththeBalticStateswasfirstadvocated
bytheCommitteesomemonthsago.Forbothpolitical
andeconomicreasonstheCommunitymustformcloser
linkswiththeseStatesandembedtheminthepan­
Europeanedifice.Thisaccordswiththethinkingofthe
EuropeanCouncil,whichstressedattheRomeSummit
inDecember1990thattheCommunityshouldconclude
EuropeAgreementsasquicklyaspossibleandthat
'thesewillmarkanewstageintheCommunitypolicy
ofdevelopingincreasinglycloserelationswith...(the
countriesofcentralandeasternEurope)'(2).TheCom­
mitteefirmlysupportstheintentionoftheDanishPresi­
dencynotonlytoimplementthetradeandcooperation
agreementswithoutdelaybutalsotoexpandrelations
withtheBalticStatesonthebasisofagreementsas
soonaspossible.Withthisaiminview,thePresidency
hascalledforregularassessmentstobemadetodeter­
minewhetherthesituationinthethreeBalticStateshas
madesufficientprogressforexploratorytalkstobe
initiatedontheconclusionofAssociationAgree­
ments(3).Thisis,ofcourse,conditionaluponthese
States(a)reachingthe'pointofnoreturn'ontheroad
towardsdemocracyandthemarketeconomyand(b)
pressingonsuccessfullywiththeprocessesofpolitical,
socialandeconomicrenewal.4.2.TheCommitteeunreservedlyendorsestheneed
forconsolidationofthepoliticalandeconomicfree­
domswhichareattheheartof'association'.Itisalso
essentialthatajointdeclarationofintentbemade
stipulating :thattheprocessofestablishinganewstate
andeconomicorderwillcontinuetobebasedonrecog­
nitionoftheruleoflaw,respectforhumanrights
andtherightsofminorities;thatmulti-partyelectoral
systemswithfreeanddemocraticvoting(basedonthe
secretballot)willbeintroduced;thatgovernmentswill
pressaheadwitheconomicliberalizationbasedonthe
principlesofthemarketeconomy;andthatapolicyof
socialjusticewillbepursued.PartiestotheAssociation
Agreementsmustlikewisegiveaclearindicationof
theirreadinesstoacceptthefirmcommitmentsarising
fromtheCSCEprocess,inparticularthefullimplemen­
tationoftheprinciplesandprovisionssetoutinthe
HelsinkiFinalAct,theconcludingdocumentsofthe
follow-upconferencesinViennaandMadrid,theParis
CharterforaNewEuropeandtheEuropeanEnergy
Charter. 4.FutureEuropeAgreementswithEstonia,Latviaand
Lithuania
4.1.WhenpreparingitsOwn-initiative Opinionson
relationsbetweentheECandthecountriesofcentral
andeasternEurope,theCommitteehadtocontendwith
theproblemofhowtoobtainrelevantinformation .The
ECCommissionwasinprinciplereadytotakepartin4.3.TheCommitteewouldalsoonceagaindraw
attentiontotheneedforthepreambletotheEurope
Agreementstoincludeprovisionforthesocialdimen­
sionofthemovementtowardsEuropeanunification
andtomakereferencetotheECCharteronBasicSocial
RightsforWorkers,adoptedby11MemberStatesat
theEuropeanCouncilinStrasbourginDecember1989.
Offundamentalimportanceinthiscontextistheestab­
lishmentofrelationsbetweenemployersand
employees,actingasindependent'socialpartners',
whilstmaintainingtheroleandtheresponsibilityof
thepublicauthorities.InresponsetotheCommittee's
earlierdemands,itwasrepeatedlyarguedthatthere
wasnoneedforspecificreferencestobemadeinthe
preamblesincetheagreementscontainednumerous(')OJNoL403 ,31.12.1992.
(2)EuropeanCouncil,SN/428/90.
(3)WorkprogrammeoftheDanishECPresidencyforthefirst
halfof1993,SN/1075/93.

NoC129/40 OfficialJournaloftheEuropeanCommunities 10.5.93
Politicaldialogue
4.5.IntheCommittee'sview,politicaldialogueis
thekeyelementintheEuropeAgreements .Thepurpose
ofthisdialogueistofacilitateintegrationoftheeastern
Europeanstatesintothecommunityofdemocratic
nations,carryforwardthestep-by-stepprocessof
achievingcloserrelationswiththeEuropeanCom­
munity,forgenewbondsofsolidarityandhelpto
achievegreatersecurityandstabilitythroughoutEuro­
pe.Atministeriallevelpoliticaldialogueisconducted
intheAssociationCouncil,atparliamentary levelin
theParliamentary AssociationCommittee .passageswithasocialcontent.Thislineofreasoning
missesthepoint.Itisrecognizedthattheabove-men­
tionedCharterwasnotadoptedunanimously (thisis
presumablytherealreasonwhynoreferenceismade
toit)buttheCommunityshouldbearinmindthatthe
economicconceptsunderlyingtheswitch-overfroma
centrally-planned economytoamarketeconomyin
easternEuropepayscantattentiontothesocialdimen­
sion.Thisatleastistheimpressionreceivedbythe
Committee.Aparticularlydepressingaspect,notedby
J.K.Galbraithj1),is'thecasualacceptance(byindus­
trializedwesterncountries)ofpoverty,unemployment
...andadeclineinlivingstandards.Theseaspects
areregarded....ashavingatherapeuticvalue'.The
Committeefirmlybelievesthatitwouldbeveryhelpful
ifthevariousECCouncilsweretogivemorethorough
considerationthanhashithertobeenthecasetofinding
waysinwhichpromisingreformpolicieswhichpay
properattentiontosocialaspectscanbeformulatedin
theAssociatedStatesineasternEuropeandimplement­
edintheinterestsofEuropeasawhole.Ifthetaskis
mainlyentrustedtointernationalfinancialinstitutions,
thereisadangerthattheapproachwillbeone-sided.4.6.Thenewly-emerging democraciesofcentraland
easternEuropeareexposedtosignificantrisksduring
thepresentphaseoftherootandbranchrenewalof
theirpolitical,economicandsocialsystems.Anyrad­
icalizationofpoliticsorsocialextremismwillhavea
balefuleffectontheintegrationprocessinEuropeasa
whole.Preventionofconflicts—particularlyduringthe
initialphaseofthetransformation processes—will
placeheavydemandsontheformandqualityofthe
politicaldialogue.Glossingovertheproblemsanddis­
agreementswithverbosedeclarationsisnotenough.It
is,ofcourse,ofmajorimportanceinthisphasethat
politiciansandsocialgroupskeepeachotherinformed
andconsulteachother.IntheCommittee'sviewitis
thereforeonlylogicalthateconomicandsocialgroups
shouldparticipatetogetherinthedialogue.Themore
thoroughlythesegroupsdiscusstheissueswitheach
other,themorefruitfulwillbetheirparticipationin
thepoliticaldialogue.4.4.TheCommitteehasrepeatedlyurgedthe
Counciltoconsiderthequestionofaccessionbythe
BalticStatestotheECatanappropriatetime.The
preambletotheEuropeAgreementswiththeBaltic
Statesshould,liketheAssociationAgreementswith
theeasternEuropeancountries,makereferencetothe
possibilityofaccessiontotheEC.Thiswouldempha­
sisetheseriousintentionofbothpartiestoplacetheir
jointrelationsonamuchcloserbasisintheforeseeable
future.Twoprerequisitesforsuchareferenceareof
coursethattheBalticStates(a)aligntheirlegalframe­
workandpracticallegislationonEClawfroman
earlystageand(b)followbasicECthinkingintheir
economic,financialandsocialpolicies.Itwouldbe
wrongfortheseStatestopostponeadoptionofthe
necessarymeasuresonthegroundsofsupposedpolitical
imperativesoroutofconsiderationforotherinterests.
AstheCommissionrightlypointsout,countrieswishing
tojointheCommunitymustrealizethatfuturemember­
shipconditionswillbeverydifferent;theSingleMarket,
economicandmonetaryunion,acommonexternaland
securitypolicy,inadditiontothebodyofexistingEC
legislation(acquiscommunautaire ),willplaceconsider­
abledemandsonwould-bemembers.Thereistherefore
littlepointinpressingaheadwithaccessiontotheEC
aslongasmajorhurdleshavestilltobeovercomein
theprocessofmovingtowardsamarketeconomyand
aslongasthecompetitiveness oftheeconomiesof
thethreeBalticStatesremainsunsatisfactory .Pressing
aheadundertheseconditionswouldmeanthatthe
BalticStateswouldbefacedonceagainwithprofound
problemsofadjustmentandwouldhavetoexpect
growth,levelsofemployment,pricesandexternaltrade
tosuffermajorsetbacksyetagain.4.7.TheCommitteehasproposedonseveral
occasionsthatprovisionbemade,inanadditional
articleoftheTreaty,forparticipationbytheeconomic
andsocialinterestgroupsinthedialogueintheAssoci­
ationCouncil;theCommitteefurtherproposedthatan
'AdvisoryCommitteefortheAssociation'beestab­
lishedafteratransitionalperiod.Thetaskswhichmight
beattributedtothisadvisorycommitteeweresetout
inarecentCommitteeOpiniononconsultativemachin­
eryforeconomicandsocialorganizations incentral
andeasternEurope(2).Suchanadvisorybodywill
clearlyonlybeabletoworkefficientlyiftheeconomic
andsocialorganizations intheeasternEuropean
countriesconcernedarelikewisefullyinformedabout
theEuropeAgreementsandareinvolvedintheir
implementation .Ithasinthemeantimebecomeclear
thattheCommittee'sproposalhasstruckachord.
RomaniaandtheECagreedinajointdeclarationthat
the'AssociationCouncil...istoexamine...thesetting
upofaconsultativemechanismconsistingofmembers
oftheECEconomicandSocialCommitteeandtheir
Romaniancounterparts'(3).TheCommitteewelcomes
thisjointdeclaration,whichisaninitialstepinthe
(*)J.K.Galbraith,'EinRezeptnamensKapitalismus'(Aformula
called'capitalism'),articleinDieZeit,editionNo44,date(2)OJNoC19,25.1.1993,p.114.
(3)OJNoC19,25.1.1993,p.88. 26October1990.

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/41
rightdirection.ItalsocallsupontheECCounciland
Commissiontoreachanagreementonsimilardeclar­
ationswithotherAssociationStatesandhavethese
declarationsincorporatedintheEuropeAgreements
whichhavealreadybeennegotiated.CISRepublics.TheECshouldassoonaspossible
jettisonitstraditionalprocedureofofferingcapital,
technicalassistanceandadvicebutbeinghesitantto
grantthesimplestformofassistance,i.e.toopenup
itsmarketquickly(*).Withthebestwillintheworld,
thisstrategycannotbereconciledwiththeconstantly
repeatedclaimthattheEChasalwaysadoptedanopen
approach.
Generalprinciples
4.10.TheCommission'sReporttotheEuropean
CouncilinEdinburghprovidesgroundsforoptimism.
Itnoteswithregardtothequestionofimprovedmarket
accessforAssociatedStatesinCentralandEastern
Europethat:'...thepaceofliberalizationshouldbe
increasedandtradeobstaclesinsensitivesectors
removedmorerapidly...Indeed,economicexpansion
incentralandeasternEuropewillbenefitboththe
countriesdirectlyinvolvedandtheCommunity'(2).
ThisisexactlythecourseofactionwhichtheCom­
mitteehasrepeatedlyurgedinitsOpinions.TheAssoci­
ationCouncilsshould,however,carefullymonitorthe
economicandsocialimpactofliberalizationandpre­
vent'socialdumping'.Thepotentialimpactoflib­
eralizationonworldtradehasbeendemonstrated by
anOECDstudydrawnupin1992inthelightofa
computersimulationexercise.Thisstudyfoundthatthe
liberalizationmeasuresproposedintheGATTUruguay
Roundcouldgenerateadditionalincomeworldwide
ofsome$200000millionbytheyear2002,andthat
completeliberalizationofworldtradecouldgenerate
anadditionalincomeofalmost$500000million(3).4.8.NewprovisionswereincludedintheEurope
AgreementswithBulgariaandRomaniastipulatingthat
respectfordemocraticprinciplesandhumanrights
andthecontinuedimplementation ofmarketeconomy
reformswerefundamental totheAssociation .The
Committeeunreservedlywelcomedthisadditiontothe
AssociationAgreementsbutcalledforinclusionin
futureofthefurtherstipulationthatthesafeguarding
ofbasicsocialrightsandrespectfortherightsof
minoritiesshouldalsoberegardedasfundamentalto
theAssociation .InEstoniaandLatviaRussiansaccount
formorethan30%ofthetotalpopulation.Inthis
context,theCommitteewishestohighlightthedecision
takenattheCSCEConferenceinHelsinkitoappoint
aHighCommissioner forNationalMinorities.The
SummitDeclarationof10July1992stipulatedthatthe
HighCommissioner wastodrawattentioningoodtime
totensionswhichcouldpossiblylead,withintheCSCE
area,toconflictsliabletothreatenpeace,stabilityand
relationsbetweenthesignatorystates.ThenewHigh
Commissioner hasalreadyvisitedtheBalticStatesand
acquaintedhimselfthoroughlywiththesituationas
regardsnationalminoritiesinthosestates.TheCom­
mitteeisconfidentthattheHighCommissioner can
makeanimportantcontributiontopreventingand
resolvingconflictsintheBalticarea.Atthesametime
theCommitteeurgesthatmembersofminoritygroups
wishingtobenaturalizedbegivenWesternassistance
forspecificpurposes(e.g.financialassistanceinrespect
ofseminars,languagecoursesandteachingmaterials).4.11.TheCommitteefullyappreciatestheneedfor
exceptionsinsectorsinwhichtheCommunityitselfhas
majorstructuraladaptationproblems.Theseexcep­
tionsmusthoweverbekepttoaminimumsincethe
Communityiscommittedtobaseitsfree-tradeagree­
mentsontherelevantGATTprovisions,whichmeans
thatdutiesandotherrestrictivemeasuresaffecting
bilateraltradehavetobedismantledvirtuallyacross
theboard.Inthelongtermnoareacanbeexcluded
fromreciprocalmarketopening.Freemovementofgoods
4.12.TextilesandECSCandagriculturalproducts
areclassifiedas'sensitive'.TheCommunitywilldoubt­
lesshaverecourse,ifnecessary,tothespecialrulesfor
theseproductswhicharesetoutinprotocolstothe
EuropeAssociationAgreements .4.9.TheEuropeAgreementsprovideforthephased
establishmentofafreetradezonewithintenyears.
UndertheprovisionsoftheexistingAgreements—
andthiswilldoubtlessalsobethecasewithfuture
AgreementswiththeBalticStates—theEuropean
Communityistointroducefreetradeearlierthaneast­
ernEuropeanAssociatedStates.TheCommitteehas
alwaysendorsedthisasymmetricalapproachbuthas
calledupontheEuropeanCommunitytograntexten­
siveaccesstoitsindustrial-product market—subject
tospecialprovisionsforasmallnumberofsensitive
sectors—assoonastheAssociationAgreementcomes
intoeffect.Thisrecommendation isofparticular
importancetotheBalticStates,whichhavetoovercome
majorstructuralproblemsandcreatenewmarketsfor
theirproductsinnorthernandwesternEuropeinorder
tobeabletograduallyloosentheirclosetieswiththe()G.Fels,Morgendammerung imOsten?('Anewdawninthe
East?'),InformationserviceoftheInstitutderdeutschen
Wirtschaft,Cologne,Volume19,7January1993.
(2)TowardsacloserassociationwiththecountriesofCentral
andEasternEurope,ReportbytheCommissiontotheEuro­
peanCouncilinEdinburghon11/12December1992.
(3)OECDdocumententitled'Tradeliberalization :What'sat
stake?'Paris1992.

NoC129/42 OfficialJournaloftheEuropeanCommunities 10.5.93
countries,particularlytheCISrepublics,forhardcur­
rency,andthatCommunityfundingbemadeavailable
forthispurpose.TheCouncilhasinthemeantime
implementedthismeasure.TheCommitteesalsowel­
comestheconclusionofagreementswiththeBaltic
Statesoncooperationinseafishing(fishingrightsand
quotas;jointventures;vocationaltraining,etc.).4.12.1.TheBalticStateshaveanumberofmajor
textilesenterpriseswhichwillveryprobablysurmount
theirinheritedproblemsquickly,catchupwiththeir
westerncompetitorsandcontinuethetraditionofthe
periodbetweenthewarswhentextilesandclothing
wereanimportantindustrialsectorintheBalticStates.
Itisnotimpossiblethat'thedevelopmentofthetextiles
industryinabandstretchingfromcentral/easternEuro­
peacrosstheBaltictoStPetersburgandMoscowwill
beincreasinglyreflectedbytradestatisticsincoming
years'(1).AsinthecasesofBulgariaandRomania,
outwardprocessingdutieswilldisappearoncethetrade
sectionsoffutureagreementsenterintoforce.The
Committeeassumesthattheunequaltreatmentof'quo­
ta'and'non-quota'clothingwilldisappearfromthe
outset.ItalsocallscntheBalticStatestocreatestable
legalandotherconditionsforexternaltradeassoonas
possible.Theseareaprerequisiteforgreaterinter­
nationaltradeingoodsandservices.TheCommunity
hasaparttoplayhere.Itmustensurethattrade
hindrances,suchasthedifficultieswithtransitthrough
Poland,areavoidedinfuture.Tradebarriers—whether
openorconcealed—arenotsuitableinstrumentsfora
freeandfairEuropeandivisionoflabour.4.13.TheCommitteehasrepeatedlysetoutits
detailedviewsonsupportingmeasuresdesignedto
facilitatetheestablishment ofafree-tradearea.The
Committeehasconstantlyexpressedsupportinprin­
cipleforapackageofmeasuresincludingproduction
standstillagreements,consultationsoverdumping,safe­
guardclauses,agreementsonnon-discrimination and
onthesettlementofdisputes,andestablishmentof
preferentialrulesoforigin.TheCommitteehasalso
emphasizeditsexpectationthattheseagreementswould
helptoavoiddisruptionsinvisibletradebetweenthe
ECandtheAssociatedStatesor,atleast,toresolve
themrapidly.
4.12.2.TheCommitteebelievesthatECSCproducts
willnotposemajornegotiatingproblems.Latviahasa
steelworkswithanannualcapacityof550000tonnes
ofrawsteeland640000tonnesofrolledsteel,but
thesequantitiesarenotlikelytocauseanynoticeable
disturbancesontheCommunitymarket.Nevertheless ,
whenthenecessarystructuraladjustmentsaremadeto
thepan-European steelmarket,thesecapacitiesshould
enterintotheequation.4.13.1.TheCommitteehasattachedparticular
importancetoconsultationfollowingidentificationof
dumpingandhasrepeatedlycalledforGATTcodes(on
anti-dumpingmeasuresandsubsidies)tobeobservedin
theirentirety.TheAssociatedStatesineasternEurope
shouldalsoenterintoabindingcommitmenttorespect
ECrulesonsubsidiesunreservedly .Itisrecognizedthat
recentexperiencewithregardtothedumpingofeastern
EuropeanproductsontheECmarket,isscarcely
encouraging .Twoquestionshavetobeansweredhere:
weretherelevantpassagesintheAgreementsdrafted
sufficientlyclearly?(TheCommitteecriticizedtheearli­
erAgreementsforthisreason);anddotheavailable
sanctionscomeintoplaytoolateandwithinsufficient
effect?Attentionisdrawninthiscontexttothedis­
cussionsonArticle60oftheViennaAgreementon
TreatyLaw.4.12.3.Agriculturalproductsplayapartintheexter­
naltradeofthethreeBalticStates,butdataisstilltoo
incompletetoallowareliableassessmentofexternal
tradeinindividualproducts.Thestatisticscontainedin
IMFreportsmerelyshowthatin1990food,agricultural
andfisheriesproductsaccountedforagood20%of
thethreecountries'exports,whilstimportsofthese
productsvariedfromagood10%(Estonia)to25%
(Lithuania).Whetherthisincludesproductswhich
mightrealisticallybeconsideredbytheCommunityas
'particularlysensitive'willonlybecomeclearinthe
courseofconcreteassociationnegotiations .Inantici­
pationofthesenegotiations,theCommitteerecallsits
proposalthatagriculturalsurpluses,includingthoseof
theBalticStates,besoldtoothereasternEuropean4.13.2.TheCommitteewentalong,forpolitical
reasons,withtheclassificationoftheAssociatedStates
fromtheoutsetas'statesoperatingamarketeconomy'
whichitregardedasprovidinganincentiveforthese
statestopressaheadresolutelywiththereformprocess.
AstheCommitteepointedoutinitsmostrecentOpin­
iononBulgariaandRomania,theECCommissionis,
however,likelytofacearatherdifficulttaskinthenext
fewyearswhenitiscalledupontomakea'fair'
comparison,undertheECanti-dumpingregulation,
betweentheexportpriceofagivenproductandits
'normalvalue'.ThefactthattheCommission needed
almostayeartoreachadecisionontheneedforanti­
dumpingdutiestobeleviedonseamlesssteeltubesand
ontherateoftheduty,providesfurtherproofofthe
difficultieswhichmaybecausedbybeingtoohastyin
assumingthatthereformingeasternEuropeancountries
alreadyhave'operating'marketeconomies.
(')A.Gälli,NöteundPerspektivenderTextil-undBekleidungs­
industrieinOstmitteleuropa andderGUS,(ifoSchnelldienst),
MunichIG45/No30/1992.4.13.3.TheCommitteehasexpressedconcernover
the(veryrestrictive)rulesoforiginsetoutinthetrade

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/43
provisionsoftheEuropeAgreements .Inthelightof
thedivisionoflabourinEurope,itisessentialtohave
auniformsetofrulesoforiginwhichwillapplytothe
EFTAStatesaswellastotheAssociatedStatesin
centralandeasternEurope.TheCommitteehasthere­
foreurgedthattheEuropeanEconomicArea(EEA)
provisions,togetherwithanalternativepercentage­
basedcriterion,beincorporatedinalltheEuropeAgree­
ments('pan-European'cumulation).Theclaimthatthe
differentiationofrulesoforigin,hithertoadvocatedby
theECCommission ,isbasedonacarefullyconsidered
policycannotbetakenseriously.TheCommitteehas
similardifficultyincomprehending theargumentthat
differentrulesoforiginarenecessaryinordertounder­
pintherestructuringprocessesinthestatesof.central
andeasternEurope.Onlyonefactiscertain:thepleth­
oraoforiginrulesinEuropeisaconsiderablebarrier
toafurtherbroadeningofthedivisionoflabourin
Europeasawhole.Theexistenceofdifferentrulesof
originmeansthatenterpriseshavetomeetanunjustifi­
ablyhighlevelofexpenditureonorganizationand
administration whichoftennullifiestheadvantagegai­
nedasregardscustomsdutiesandwhichcanleadto
enterprisesbeingforced,toalargeextent,toabandon
planstosendproductsforprocessingtootherEuropean
countriesbecauseofinsuperablepracticalproblems.It
isaboveallSMEswhichareadverselyaffectedbythis
situation.Bearinginmindtheseconsiderations ,the
CommitteewelcomesthefactthattheECCommission
isgraduallybeingwonovertotheideaof'pan-Euro­
pean'cumulation .Initsrecentreportonthedevelop­
mentofcloserassociationwiththestatesofcentraland
easternEurope,theCommissionemphasizesthatthe
ECmustpromoteregionaleconomiccooperationby
authorizingcumulation,inrespectofrulesoforigin,
forallproductsfromtheAssociatedStatesofcentral
andeasternEuropeandfromEFTAStates.TheCom­
mitteetruststhattheEuropeanCouncilinCopenhagen
willaccepttheviewoftheCommissionandcallfor
relevantimprovements totheexistingEuropeAgree­
ments.TheCommitteeurgestheDanishPresidencyto
pressfortheauthorization ,inrespectofrulesoforigin,
ofalternative-percentage criteriaforimportsfromnon­
ECcountries.UndertheComeconprovisions,Associ­
ationStatesofcentralandeasternEurope,andnotleast
theBalticStates,were—andtoacertainextentremain
—closelylinkedwithothercountriesofcentraland
easternEuropeandwithAsiancountries.Absenceofa
suitablepercentage-basedcriterionwillseriouslyham­
pertheirattemptstoexpandtradewiththeWest.territoryofanothercontractingparty.Bilateralagree­
mentsbetweenECMemberStatesonaccesstojobsare
tobeimprovedandamplifiedwherepossible.Ata
laterjuncturetherespectiveAssociationCouncilisto
considerwaysandmeans—allowingforsocialand
economiccircumstancesandtheemploymentsituation
—ofopeningupaccesstojobsstillfurther.Inits
OpinionstheCommitteehasalwaysendorsedtheinte­
grationoflegallyemployedworkersfromeasternEuro­
pebut,inviewofthecontinuingdifficultemployment
situationintheCommunity,hasexpressedconcern
abouteasingcross-frontier accesstojobstooquickly.
TheCommission ,however,iskeepingtoitsprevious
lineandsuggests,initslatestpaperoncloserassociation
withthecountriesofcentralandeasternEurope,that
'MemberStatesshouldbeencouragedtoapplythe
provisionsoftheEuropeAgreementsconcerningaccess
toemploymentassoonaspossible,notablythrough
theconclusionofbilateralagreementsonquotas'.Once
again,therearenoconcretereferencestothecritical
employmentsituationintheCommunity,which—
withafewexceptions—holdsoutnohopeofan
additionaldemandforlabourintheforeseeablefuture.
AnotherCommissiondepartmentstatesinthe1993
annualeconomicreportthatthisyeartherewillbe
almosttwomillionmorejoblessintheCommunity
thanin1991andthetotalnumberofunemployedmay
reachseventeenmillionorso.Thismeansthatthe
progressmadeinthesecondhalfoftheeightieswillbe
lostinthefirstthreeyearsofthenineties.Itispossible
thatanevenbettercoordination oftheCommission
departmentswillmakeitpossibletowordAgreement
provisionsoncross-frontier labourmobilitymore
realisticallyinfuture.Inaddition,theCommission
shouldinformtheECMemberStatesindetailofits
ideasaboutbilateralagreementsonquotas(intheextre­
mecase,currentlymorethanseventyagreements).In
thefinalanalysis,whatisneededisaconvincing
approachtothecross-frontierlabourmarketwhich
opensuprealisticprospectsforthecentralandeastern
EuropeanpartiestotheAgreements .Thisapproach
shouldatthesametimecovertheproblemofunde­
claredworkerswhich—despitethecriticismvoicedby
theCommittee—isnotmentionedbyanyofthecurrent
EuropeAgreements.TheCommitteewelcomestheout­
comeoftheBudapestconferenceonuncontrolled
migration.Itshouldalsoberecognizedthatthedraft
partnershipandcooperationagreementswiththefor­
merSovietrepublicsalreadycontainthefirstactual
indicationthattheCooperationCouncilistoconsider
jointeffortstocontrolillegalimmigration .
Freedomofmovementforworkers,rightofestablish­
mentandfreedomtoprovideservices
4.14.TheprovisionsoftheEuropeAgreementson
(cross-frontier )labourmobilityaremainlyconcerned
withnon-discrimination ofworkerswhoarecitizensof
acontractingpartyandlegallyemployedwithinthe4.15.Withregardtotheagreementsontherightof
establishment ,theCommitteehasrepeatedlyasserted

NoC129/44 OfficialJournaloftheEuropeanCommunities 10.5.93
Capitaltransactions,competitionandapproximation
oflegalprovisions
4.17.Freedomofcross-frontiercapitaltransactions
isofgreatimportancefortheeconomicintegration
oftheBalticStates.Freedomofcapitaltransactions
promotesmonetary-policy cooperationandactionto
ensurestability.TheCommitteeOpinionontheEuro­
peanAssociationAgreementsendorsesallprovisions
whichpromotetheliberalizationofcapitaltransactions
betweentheCommunityandthepartnercountriesof
easternandcentralEurope.Ofparticularvalueisthe
undertakingtoensure,afteratransitionperiodbegin­
ningattheeffectivedateoftheAgreements,thefreedom
ofcapitaltransactionspertainingtodirectinvestments,
theirliquidationandtherepatriationofprofits.Particu­
laremphasisshouldbeputonthepromiseofthe
AssociatedStatesthattheywilltakeovertheCom­
munityprovisionsoncapitaltransactionsenblocafter
atransitionperiod.thatfreedomofestablishment willpromotethetran­
sitiontoamarketeconomyandhelptoensurethatthe
economiesofthepartnercountriesofeasternandcen­
tralEuropearemodernandcompetitive.TheCom­
mitteeis,however,scepticalabouttheprotective
measuresagreedforfirmsinthepartnercountries
whichsuffera'drastic'lossoftheirshareoftheir
homemarkets.ApartfromthefactthattheAgreement
provisions(relevantmarket,marketvariable,market­
sharedefinition),canbeinterpretedinmanywaysand
soonerorlaterwillprobablygiverisetodiscussionsin
theAssociationCouncils,theCommitteeissurprised
bythestructuralthinkingwhichtheseprovisionsseem
tosuggest.(Multi-annual )safeguardclauseswhich
postponetheelimination (presumablyinmanysectors)
offirmsattheexpenseofcompetitorswillwaste
resourceswhichcouldbeusedmoreproductivelyelse­
whereandwillmakeitmoredifficultforthereforming
countriesofeasternandcentralEuropetoachievea
competitiveeconomicstructure.Itistruethatthe
reformcountries—whicharealreadyinaweakposition
—findthemselvesabruptlyfacedwithmajorchallenges.
Theradicalstructuralproblemsassociatedwithreform
arecompoundedbyincreasedcompetitionfromimport­
edproductsandbytheriseintheirenergyandraw­
materialcosts.Companies,andespeciallytheworkers
concerned,arehardhitbytheattemptstoresolvethese
problems.Butone-sidedstructuralmeasuresdesigned
tomaintainthestatusquoareliabletosimplytreatthe
symptomsandhaveundesirablelong-termside-effects.
Theywillnotremovetherealcausesofthe'drastic'
marketlossesinreformcountriesorcreatetheprerequi­
sitesformasteringeconomicandsocialchange.4.17.1.TheBalticStateshavetakenthefirststeps
towardsliberalizationofcapitaltransactions .Thepri­
orityaimiscurrencyconvertibility ,whichmustbe
perceivedasacoreelementofmarketeconomytrans­
actions.IftheyknowthattheycanconvertBalticcur­
renciesintoforeigncurrencies,potentialforeigninves­
torswillnotworryabouttheircapitalbeingblocked
ina'mousetrapcurrency'.LastyearEstoniaandLatvia
becamethefirstoftheformerSovietrepublicstobreak
awayfromtheRussianrouble.InJuly1992theLatvian
roublebecamethesolelegaltenderinLatviaand
becameconvertibleinreality.Atthebeginningof
MarchLatviabroughtthefirstbanknotesofitsnew
currencyintocirculation.Thenewcurrency,thelat,
replacestheLatvianroubleandistobeconvertibleby
thesummerofthisyear.TheEstoniancrownhasbeen
classifiedasagenuinehardcurrencysinceitsintroduc­
tioninJune1992,andthecountry'smoneysupplyis
coveredbyitsgoldandforeign-currency reserves.The
crown'sfixedexchangerateof8crownstoonedeutsch­
markhelpsexportersbutincreasesthecostofurgently
neededimportedproductssuchasoil,naturalgasand
artificialfertilizers.InLithuaniathe'Talona'voucher
currencyfunctionsasaparallelcurrencytotheRussian
rouble.Thenewgovernmenthassaiditwillintroduce
anationalcurrency,butitisnotcertainwhetherthis
willbedonein1993.Atallevents,thesituationis
complicatedbytheintentionoftheLithuanianGovern­
menttoreintroduceadministeredpricesinorderto
curbinflation,whichisrapidandcontinuingtogain
momentum .4.16.Themacroeconomic importanceoftheservice
sectorandoftradeinservicesvariesfromECMember
StatetoECMemberState.Althoughthesectorismulti­
fariousanddifficulttoquantify,itisreasonableto
assumethatservicesaccountdirectlyorindirectlyfor
some60%ofemploymentintheCommunity.Thisfact
alonewarrantsdeterminedpursuit—forinstanceinthe
AgreementswiththeBalticcountries—ofphased,mutu­
alliberalizationofthetradeinservices.TheCommittee
hasrepeatedlywelcomedthereadinessoftheCom­
munityanditsassociatedpartnersineasternandcentral
EuropetoincorporatetheoutcomeoftheGATTUrug­
uayRoundintheAgreementsatanappropriatejunc­
ture.Itremainstohopethattheprematureexclusion
ofindividualsectors(telecommunications ,financialser­
vices,seaandairtransport,etc.)willnotcreatea
precedentforfurtherexclusionsandthuscreatetoo
manyexceptionstothehoped-foragreementsinGATT
ontherulesandprinciplesoftradeinservices.4.17.2.ItwouldbeunrealistictoexpecttheBaltic
Statestoproducefortheassociationnegotiationsa
concreteliberalizationprogrammegivingfirmdates
forthefullliberalizationofthevariouscategoriesof
financialtransactions .Instead,theCommitteeconsiders
thatattheendofthefirsttransitionstagetheAssoci­

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/45
competitivityandtheenvironmentallplayarolein
decisionsonwhethertoauthorizesuchinvestments .ationCouncilsshouldconsidertheissueofliberaliza­
tionanddiscussfurtherindividualsteps.Eventhe
majorwesternindustrializedcountrieshaveleftthem­
selvesagreatdealoftimefortheintroductionof
fullliberalizationofcross-frontiercapitaltransactions .
IndividualECMemberStatesoperatedacomprehen­
sivesystemofcapital-transaction andforeign­
exchangecontrolsfordecades.TheAssociationAgree­
mentsmust,however,ensurethatdomesticcompanies
havecompletelyfreeaccesstoforeigncurrenciesfor
current-account transactions .Thisminimumrequire­
mentisbroadlyconsonantwiththeIMFdefinition
ofconvertibility .ThestatutesoftheIMFrequireits
members—whichincludetheBalticStates—toimpose
noforeign-exchange restrictionsonpaymentsand
transferswhichfigureinthebalanceoncurrent
account.Alsoinlinewiththisistheprovisioninthe
EuropeAgreementsthatcurrent-account paymentsin
freelyconvertiblecurrenciesaretobeauthorizedby
thecontractingparties.4.18.Competition isacornerstoneoftheinter­
nationaldivisionoflabour.Itencouragesindustryto
bereceptivetoandparticipateactivelyintechnological
andeconomicprogress,toadjusttostructuralchange,
andthustoensuregrowthoftheeconomyand
safeguardjobs.Inthecontextofthisbynomeans
exhaustivelistofthefunctionsofcompetition,the
Committeehasbroadlyendorsedthecompetition
provisionsoftheEuropeAgreementsandemphasized
thatwithoutcompetitiontheprocessofpan-European
integrationwouldhavemajorgaps.TheCommittee
thereforeexpectsthecompetitionprovisionsoffuture
AssociationAgreementswiththeBalticStatestobe
likewisebasedonArticles85,86and92oftheEEC
Treaty.Itisessentialthatthereshouldbeaclear
provisiononthetransparencyofStateaids.Inthis
connection,theCommitteerepeatsitsrecommen­
dationthattheAgreementsshouldalsoincludethe
stateaidcontrolssetoutinArticle93oftheEEC
Treaty.Recentdevelopments—onthesteelmarket,
forinstance—shouldhavemadeitabsolutelyclearto
theCommunitythatongoing,comprehensive aid
controlsarenecessary.TheCommitteeisconvinced
thatannualreportingontheaggregatetotaland
breakdownofstateaids,providedforinthecurrent
Agreements,istoolateandinadequate.TheCom­
mitteealsoconsidersthatinfuturestateaidsshould
notleadtotheartificialpreservationofantiquated
structures,butshouldpromotestructuraladjustment
andfurthertheestablishment ofnewindustrialstruc­
tures.Whatisneededisdirect(problem-orientated )
targetingofbottlenecks—infrastructure ,training,
eliminationofpollutionproblemsinheritedfromthe
pastandbasicresearch,togivejustafewexamples.
Alltheseproblemsareofparticularimportancein
theBalticStates.TheCommitteeconsidersthatin
thecourseofassociationnegotiationswiththeBaltic
States,theCommissionwouldbewell-advisedtorefer
inconcretetermstotheseaspectsofasuccessful
aidpolicyandexplaintoitseasternpartnersthe
Community'sbasicconceptsofaEuropeanindustrial
policyinanopen,competitiveenvironment .4.17.3.Convertibility isanecessarybutnotasuf­
ficientconditionforincreasedforeigninvestmentin
theBalticStates.Theremustalsobean'appropriate'
environmentfordirectinvestmentsbyforeigners.All
threeBalticStatesadoptedrelevantinvestmentlaws
quicklyandhopedthatthegreaterinfluxofforeign
investmentcapitalwouldboosttheireconomicgrowth,
improvethejobssituationandleadtothetransferof
know-howandtechnology .Thesehopeshavenot
alwaysbeenborneout,tojudgefromtheregistered
jointventures.EspeciallyinLithuania,whichadopted
a'foreigninvestmentact'inDecember1990andtwo
decreesinMay1991,thelegalframeworkdidnot
alwayscorrespondtotheideasofforeigninvestors.It
reflectedafearthattheeconomywouldfallintothe
handsofforeigncapital,andthedominanceofstate
influencealsoactedasadeterrent.Inparts,thefirst
Lithuanianinvestmentactandthetwodecreesreadlike
'areportonadefensivewaragainsthostileforeign
investors'.Lithuaniahasnowmadesignificant
improvements toitsinvestmentenvironmentandthis
islikelytoencourageinwardinvestment .Thelawsof
EstoniaandLatviaweremoreinvestor-friendly from
thestart.Forinstance,foreigninvestorsinEstoniaare
freetoconverttheirprofitsintoforeigncurrenciesif
theypaytheirtaxesandmeettheirotherobligations.
Theyarealsocompletelyfreetoliquidateandrepatriate
theirinvestments .Similarprovisionsarecontainedin
theLatvian'foreigninvestmentact',thoughinvest­
mentsofoveronemillionUSdollarsstillhavetobe
authorized.TheinfluenceontheLatvianeconomy(job
creation,useofLatvianrawmaterialsandservices)and
theexpectedimpactonproductivity,productquality,4.19.InitsOpinionontheEuropeAgreementswith
theVisegradcountries,theCommitteestatedthatEuro­
peanundertakingsinvolvedincross-frontierplanning
andcooperationhavetheproblemthattheyhaveto
livewiththreelegalsystems.Firstly,theirown(dom­
estic)law;secondly,Communitylaw,whichisof
increasingimportanceforpartnersineasternandcen­
tralEurope;andthirdlythelawofthecountrywhich

NoC129/46 OfficialJournaloftheEuropeanCommunities 10.5.93
competitionontheworldmarketandhelpintegrate
themintotheinternational divisionoflabour.Another
positivefactoristhecontractingparties'declaredinten­
tionoftakingenvironmental considerations into
accountfromtheverystartinalltheireconomicactivi­
ties.Thisalsomeansagreatneedforadvicewhen
environmental effectshavetobeassessed.IntheBaltic
Statesthereisnoshortageofexampleswhichprove
thatforeigninvestorsrefusetoproduceenvironmental
impactassessments .isthedestinationofexportsorinvestment.Thesame
setofcircumstances isoftenassesseddifferentlyand
regulatedincontradictoryways.Sothequickerthe
legalframeworkisadjustedtoCommunitylaw,the
morefavourabletheenvironment forcross-frontier
cooperation—forinstancebetweenEastandWest—
andthebettertheprospectsforanincreaseinvisible
andinvisibletradeandincapitaltransactions .The
approximation oflegalprovisionsisadmittedlyagigan­
tictaskandcannotbecompletedovernight.TheCom­
mitteehasthereforerepeatedlysaidthattheEurope
Agreementsshouldspecifywhichlegalandadministrat­
iveprovisionsoftheAssociatedStatesshouldfirstbe
adjustedtoCommunitylaw.TheCommitteeispleased
tonotethattheCommission,too,isreadyatlonglast
toconsidertheideaofsettingpriorities.Inthealready
quotedreporttotheEuropeanCouncilinEdinburgh,
theCommissionrecommendsthat'specializedgroups
shouldbesetupwithintheframeworkoftheAssoci­
ationCommitteestoidentifyprioritiesforapproxi­
mation'oflegalandadministrativeprovisions;itstates
thattheseincludecustomslaw,competitionpolicyand
theprotectionofintellectualproperty.TheCommittee
welcomesthisselectionbut—asinpreviousOpinions
—feelsthatthelistshouldincludeenvironmentlaw,
provisionsforprotectionatworkandanumberof
consumer-protection Directives.Inaddition,Lithuania
shouldguaranteetoadaptlawsandadministrativepro­
visionsonnucleartechnologyatanearlydateandto
takeoverEuratomsafetyprovisionsforitsnuclear
powerplantinIgnalinaimmediately .Apartfromthis,
additionaltechnicalassistanceshouldbegivenstraight­
awayunderthePhareprogrammetothethreeBaltic
States,whichstillhavetonegotiateEuropeAgreements
withtheCommunity,withaview—afterobtainingthe
agreementofthethreecountries—tomakingastart
inadvanceontheadaptationoflegalprovisionsto
Communitylaw.4.21.Theaboveobjectivespointtoalargenumber
ofareasinwhichcooperationisbothpossibleand
essential.TheCommitteehasrepeatedlypraisedthe
scopeofthecooperation,whichitsupportsinprinciple.
TheCommitteedoes,however,havewell-founded
doubtsastowhethertheECbodieswillbeinaposition
toinitiateconvincingmeasuresinallthelistedfieldsin
theforeseeablefuture.Neitherthepersonnelnorthe
financialresourcesavailabletotheECbodiesarelikely
toproveadequatetogiveagenuineboosttotheentire
rangeofcooperationareas.Mostofthemeasuresare
ofamultilateralnature.Theyhavebeenreadilyentered
intobythe(ratifying)ECMemberStatesandarealso
tobecarriedoutonajointbasis.Althoughmultilateral
measuresaretoacertainextentmoredifficultto
implement,itshouldbepossibletoovercomethisdiffi­
culty.IntheCommittee'sview,thereisapressingneed
toconsiderhowtasksaretobeallocatedatEClevel
andtoputforwardproposalswithoutdelayinrespect
of(a)thefieldsofactioninwhichtheECMember
Statescanbemosteffectivelyengagedfromtheoutset
and(b)theareasinwhichtheECbodiesshouldstart
workimmediately .Agoodexampleisprovidedbythe
NordicCouncilofMinisterswhichrecentlyconsidered
thequestionofgeneralBaltic-eastEuropeancooper­
ationanddebatedwhichareascouldbestbeentrusted
totheNordicCouncilofMinistersandwhichareas
lendthemselvesbesttobilateralcooperation .
Economiccooperation
4.22.AnumberofECStateshave,inthemeantime,
takentheinitiativeandsteppeduptheiradvisoryactivi­
tiesintheeasternEuropeanstatesborderingonthe
Community .TheFederalRepublicofGermany,for
example,hasdecidedtoincreaseitsassistancewithin
theframeworkofa'generalblueprintforproviding
adviceontheestablishmentofdemocracyandthesocial
marketeconomy'.TheStatesofcentralandeastern
EuropecoveredbythisplanincludetheEuropeAgree­
mentStates,theBalticStatesandthefourCISStates
situatedclosetotheEC.Theassistanceprovidedinthe
economicfieldcovers,interalia:supportinestablishing
asocialmarketeconomy;adviceonprivatizationand
exchangesofexperiencewiththeTreuhandanstalt (the
trustresponsibleforoverseeingtheprivatizationof
state-ownedbusinessesintheformerGermanDemo­
craticRepublic);andassistanceinestablishingefficient
infrastructures ,anefficientSMEsector,anoperational
servicessectorandamodernmarket-economy orien­4.20.EconomiccooperationbetweentheEuropean
CommunityandthecontractingpartiesineasternEuro­
peisanimportantfeatureoftheEuropeAgreements .
TheECCommissionseeseconomiccooperationasan
essentialcomplementtothemovestowardsliberaliza­
tionofmovementofgoods,persons,servicesandcapi­
tal.Jointactivitiesaredesignedtoconsolidatetheecon­
omicreformprocess,whilstatthesametimetaking
accountoftherequirementsof'lastingsocialchange'.
Suchmeasuresalsoseektopromotetheharmonious
developmentoftheregion.Economic,scientificand
technicallinksaretobeestablishedandsubsequently
diversified .TheCommission considersthatthis
measurewillunderpinstructuralchangeintheAssoci­
atedStates,prepareenterprisesinthosestatestoface

10.5.93 OfficialJournaloftheEuropeanCommunities NoC129/47
tatedfinancialadministration (withresponsibilityfor
taxes,customsdutiesandthebudget).Adviceisalso
providedonproceduresforestablishingnewconsti­
tutionalandlegalsystemsandgovernmentadminis­
trationsbasedontheprinciplesoftheruleoflaw.
Helpisalsoprovidedwiththeestablishmentofbodies
representingthevarioussectorsofsociety.Needlessto
say,theactivitiesbeingcarriedoutbytheECMember
States,theNordicStatesandECCommissionshould
becoordinatedbeforetheEuropeAgreementscome
intoeffect.TheCommitteethereforeproposesthata
coordinatingcommitteebesetupwithoutdelayat
Communitylevelforthepurposeofcollatingandcoor­
dinatingthemanyformsofadvisoryassistanceand
avoidingduplicationwhereverpossible.formerUSSR,hadtogeartheireconomicstructuresand
traderelationssolelytothedictatesofSovietinternal
economicplanning.Over90%oftheBalticStates'
'externaltrade'wasconductedwiththeotherSoviet
Republics.ThetaskcurrentlyfacingtheBalticStates,
namelytheneedforarootandbranchreorganization
oftheireconomicstructuresandtheneedtoestablish
traderelationswithindustrialized Westernstatesas
partoftheprocesstomovingtowardsamarketecon­
omy,thuscallsformuchmorecomprehensive support
fromtheWest.Itshould,however,bepossibletomeet
the(relatively)higherfinancialrequirementsofthe
BalticStatessincetheireconomiesarerathersmall.In
addition,inviewofthefactthatthefundinginvolved
fallswithinreasonablelimits,theefficientuseof
resourcesismorereadilyguaranteedandeasiertomoni­
torthanintheothercountriesundergoingreform.
4.25.Inadditiontotheassistancerequiredtoconvert
andmodernizetheeconomiesoftheBalticStates,to
buildanddevelopaninfrastructurethatmeetsneeds,
andtoenabletheirworkforcestoacquirethenecessary
skills,additionalaidmayalsoberequiredinorder,for
example,tounderpinacurrency'sconvertibilityandto
enablethemtopayforimportsofimportantcommodi­
tiesinhardcurrencies.Itmayalsobenecessaryinthe
futuretoprovideshort-termaidinemergencies (food,
medicinalproducts,etc.).4.23.Thereisnodoubtthatthenecessarydeepening
andbroadeningofeconomiccooperationwiththeBalt­
icStateswouldbemademucheasierbyprogressinthe
fieldofregionalcooperationbetweentheBalticStates.
AlthoughtheBalticCouncil,whichprovidedaforum
forcoordinatingthebasesofexternalandeconomic
policyinthe1930s,hasbeenreinstated,therehasnotyet
beenanybreakthrough onachievingclosereconomic
cooperation .Whilethereareplansforjointinvestment
inareassuchastelecommunications ,motorwaycon­
struction,energynetworkandoil-refineryproducts,
theseprojectswillhavearelativelylongleadtime.The
plantoestablishafree-tradeareaembracingEstonia,
LatviaandLithuaniahasalsobeenfrozenforthetime
being.Thiswasprompted—accordingtoreportsfrom
Estonia—bythedesiretoconcentratefirstofallon
solvingindividualproblemsunderbilateralagreements .
Afurthermajorcomplication isthefactthattheBaltic
Stateshadonlylooseeconomictieswitheachotherin
previousdecadesbecausethestructureoftradewithin
theformerUSSR,or,tobemoreexact,within
Comecon,wasdeterminedmorebyarbitrarypolitical
actionthanbythedesiretoachieveaneconomically
soundandefficientdivisionoflabour.Whenleading
representatives oftheEuropeanCommunityholdtheir
politicaldiscussionswiththeGovernmentsoftheBaltic
States,theyshouldrefermoretotheneedforcloser
economiccooperationbetweenthesethreecountries.4.26.Uptomid-1992,theG24Stateshadpromised
aidtotallingsomeECU100000milliontothewhole
ofeasternEurope,includingECU70000millionfor
theex-USSR.ThelargestdonoristheEuropeanCom­
munity(MemberStatesplusInstitutions)withashare
ofover70%.However,theamountofaidtohave
actuallyreacheditsdestinationisunknown.Estimates
putthefigureatonethirdorECU30-35000million.
TheG24Stateshadcommittedthemselvesbymid-1992
toprovidingjustunderECU500milliontothethree
BalticStates.Thefinancialrequirementsinrespectof
balanceofpaymentsareestimatedbytheIMFtobeof
asimilarorder.Inthiscontext,theCommitteewel­
comestheaidcoordinationagreementsreachedbythe
Groupof24inRigaattheendofNovember1992.In
ordertoensurethatfundingisusedeffectively,all
financialaidshouldbecontinuouslymonitored,both
whenitisallocatedandwhileitisbeingspent,soas
tosecureobservanceofthebindingcriterialaiddown
bythedonors.Theoutcomeofthemonitoringshould
bediscussedintheAssociationCouncilandcommuni­
catedtothedonorstatesandtheinternationalfinancial
institutions .Financialcooperation
4.24.Inmakingthetransitionfromacentrally-plan­
nedeconomytoamarketeconomy,theBalticStates
arehavingtofacemuchgreaterchallengesthanthe
othercountriesundergoingreformincentralandeast­
ernEurope.Althoughthe'independent'Comecon
StateswerealsosubjecttotheEasternBloc'seconomic
divisionoflabour,theydidretainadegreeoffreedom
todecidetheformoftheirparticipation ,bothasregards
theirdomesticeconomiesandtheirforeigntrade.The
BalticStates,ontheotherhand,whichwerepartofthe4.27.TheCommitteeunderlinestheneedtoobserve
theprinciplesgenerallyappliedinrespectofthegrant­
ingofaid.Itisaboveallessentialtoensure(a)that
civilrightsarerespectedinthebeneficiaryStatein

NoC129/48 OfficialJournaloftheEuropeanCommunities 10.5.93
accordancewithappropriateinternationalpractice,andreflectstheneedforpoliticalandsocialstabilityand
(b)thatminoritiesaresecuredastatuswhichalso'goodneighbourlyrelations'.
DoneatBrussels,25March1993.
TheChairman
oftheEconomicandSocialCommittee
SusanneTIEMANN
OpinionontheGreenPaperontheDevelopmentoftheSingleMarketforPostalServices
(93/C129/11)
On16June1992,theCommissiondecidedtoconsulttheEconomicandSocialCommittee
ontheGreenPaperontheDevelopmentoftheSingleMarketforPostalServices.
TheSectionforTransportandCommunications ,whichwasresponsibleforpreparingthe
Committee'sworkonthesubject,adopteditsOpinionon10March1993.TheRapporteur
wasMrPompen.
Atits304thPlenarySession(meetingof25March1993),theEconomicandSocialCommittee
adoptedthefollowingOpinionby90votesfor,47votesagainstandwith1abstention.
1.Contents
1.1.TheGreenPaperdescribestheessentialfeatures
oftheCommunity'spostalsectorandhowtheprovision
ofpostalservicesoperates.Themostimportantaspects
—onthebasisof1990/1991data—canbesummarized
asfollows:
a)Thepostalsector:
—accountsfornearly1,3%ofCommunityGross
DomesticProduct(GDP),
—provides1,7millionjobs,
—hasanannualturnoverofsomeECU59000
million,
—isgrowinginvolumeby6%perannumin
thecaseofthenationaladministrations andis
expectedtogrowatanevenhigherrateinthe
privatesector.
b)Inadditiontonationalservices(postaladminis­
trationsand/orconcession-holders )private
enterprisesoperateinthepostalsector.Postal
administrations accountforapproximately 60%
andprivateoperatorsapproximately 40%ofturn­
over.
Intermsofvolume,thepostaladministrations pro­
vide96%andprivateoperatorsonly4%ofservices.c)Nationalpostaladministrations haveamonopoly
oncertainservices,whichdiffersfromoneMember
Statetoanother.Itappliesessentiallytoletters
—andinsomecasestoprintedmatter—uptoa
specifiedweight(500to2000grams).Themon­
opolycarriesanobligationtoprovidemanymore
postalservicesthanthereservedservices;
d)Inadditiontoletters,theprincipalservicecategories
areparcelsandexpressmail.Itisinthesetwoareas,
wherethenationaladministrations alsocompete,
thatprivateoperatorsaremainlyactive;
e)Some80-85%ofallmailisgeneratedbybusinesses
orotherorganizations ,withprivateindividuals
accountingfor15-20%.Theaddresseesaremainly
privateindividuals,with55%of'letters'and70%
of'parcels'beingreceivedbythem;
f)Postalservicesbreakdownasfollows:93%dom­
estic,4%intra-Community ,and3%extra-Com­
munity;
g)60%ofintra-Community mailfailstomeetthe
ConferenceofEuropeanPostalandTelecommuni­
cationsAdministrations 'recommended goalof