No C 339/44 Official Journal of the European Communities 31. 12. 91 
Moreover, the Committee does not feel that it is necess­
ary for airport coordinators to be appointed directly by 
the Member States and answerable only to them, but 
it does support the concept of neutrality and trans­
parency in slot allocation and believes that Member States should be required to ensure the appointment of 
neutral coordinators. 
Know-how and impartiality are of the utmost import­
ance for this task. 
Done at Brussels, 25 September 1991. 
The Chairman 
of the Economic and Social Committee 
Francois STAEDELIN 
Opinion on EC relations with the countries of Central and Eastern Europe 
(91/C 339/12) 
On 24 April 1990 the Economic and Social Committee, acting under the third paragraph of 
Article 20 of the Rules of Procedure, decided to draw up an additional Opinion on EC 
relations with the countries of Central and Eastern Europe. 
The Committee's comments on the Community's continuing association negotiations with 
Czechoslovakia, Poland and Hungary essentially relate to the position in mid-June 1991. The 
Committee reserves the right to comment separately on the most recent developments in 
Eastern Europe, with particular reference to the Baltic States and the USSR, and to make 
changes, where necessary, to individual passages of the present Opinion. 
The Section for External Relations, Trade and Development Policy, which was responsible 
for preparing the Committee's work on the subject, adopted its Opinion on 12 September 
1991. The Rapporteur was Mr Petersen. 
At its 289th plenary session (meeting of 26 September 1991) the Economic and Social 
Committee adopted the following Opinion unanimously. 
INTRODUCTORY COMMENTS 
Given the length of this Opinion the Committee believes 
that it would be appropriate to begin by summarizing 
its most important views and recommendations on the 
European Agreements. 
The Committee thinks it imperative to use the present 
historic opportunity to establish closer, more stable 
relations with the countries of Central and Eastern 
Europe and to lay the foundations of a Common Euro­
pean House for all European countries. 
The Committee considers that top priority should go 
to removing economic and social imbalances between 
the Western and Eastern halves of Europe. The Committee considers that existing trade and coop­
eration agreements are a possible means of strengthen­
ing inter-State dialogue; they are also likely to provide 
an economic underpinning for the political reforms now 
under way in Eastern Europe. 
The Committee welcomes the idea of Association since 
it is calculated to secure and promote closer political, 
economic and social relations between the European 
Community and its Eastern neighbours. 
The Association Agreements (European Agreements) 
also form an institutional framework for political dia-
31. 12. 91 Official Journal of the European Communities No C 339/45 
logue, capable of including exchanges of views about 
pressing bilateral and multilateral problems. 
The Committee considers that it should be possible in 
the next few years to build up a network of European 
Agreements with the Community's Eastern neighbours. 
At the same time, it urges that concrete negotiations be 
started as soon as possible with the Baltic States of 
Estonia, Latvia and Lithuania with a view to concluding 
European Agreements. At the same time, the Committee 
assumes that the European Commission will continue 
its careful, comprehensive monitoring of political and 
economic reforms and will analyze their chances of 
success impartially. Only when this has been done 
should association negotiations proper be opened. It 
would be disastrous if intra-Community-consoli-
dation—Single Market, Economic and Monetary 
Union, Political Union—were delayed or even watered 
down because the successive steps towards pan-Euro­
pean integration had been inadequately prepared. 
The Committee endorses the opening of association 
negotiations with Czechoslovakia, Poland and Hunga­
ry. It approves in principle the content of the draft 
treaties negotiated so far provided that its critical com­
ments and recommendations are duly heeded. 
The Committee urges the contracting parties to also 
refer in the preamble to the social dimension of Euro­
pean unification and to mention the Community Char­
ter of the Fundamental Social Rights of Workers 
adopted, albeit not unanimously, by the Heads of State 
or Government of the European Community in 
December 1989. Closer relations with our Eastern 
neighbours, and Community assistance, should not be 
confined to economic, technical and financial fields but 
should also adequately take into account the many 
different social aspects. 
In the interests of establishing the necessary climate of 
confidence, the Committee supports the contracting 
parties of Eastern Europe in their desire to incorporate 
in the preamble their wish to become members of 
the Community. However, it does not think that the 
preamble should specify a time horizon for membership 
applications. 
The Committee further proposes that the preamble 
contain a statement to the effect that the contracting 
parties of Eastern Europe unconditionally accept the 
'acquis communautaire' and undertake to approximate 
their respective countries as closely as possible to the 
current level of Community integration over the two 
five-year stages envisaged. 
The Committee welcomes the willingness of the con­
tracting parties to uphold the principle of free trade 
and abide by provisions of the General Agreement on 
Tariffs and Trade (GATT) in particular. The Committee calls on the contracting parties to 
ensure that economic and social interest groups are 
brought within the organizational framework embrac­
ing institutions of association. 
It recommends the creation of a consultative committee, 
made up of ESC members and members of a similar 
grouping from the associated countries. 
As regards the provisions of the European Agreements 
covering the free movement of goods, the Committee 
would emphasize the following points in particular: 
— It regrets the decision taken in the course of nego­
tiations not to apply the two-stage approach (con­
sisting of two five-year periods) to the liberalization 
of the movement of goods. As far as foreign trade 
in industrial products is concerned, a stage-by-stage 
approach—enabling the course of further market 
liberalization to be reviewed at the end of the first 
five-year period—would have been of intrinsic value 
and crucial importance. 
— The Committee supports without reservation the 
Community's asymmetrical approach to the cre­
ation of a free-trade area but wonders whether five 
years are needed to throw open the Community's 
markets completely to industrial goods from East­
ern Europe. Given the major restructuring problems 
facing these countries, the Community should con­
sider whether more convincing efforts should not 
be made to open up its markets by the time the 
treaties come into force. 
— In the case of sensitive sectors—textiles, products 
of the European Coal and Steel Community (ECSC) 
and agriculture—the Committee would draw atten­
tion to the relevant GATT provisions that no sector 
can permanently be protected from the open 
market. 
— The Committee wonders whether trade in textiles 
might not benefit from a speedier opening up of 
markets than originally proposed. The liberalization 
process could certainly be speeded up in the case of 
outward processing traffic. 
— The Committee thinks that the Commission must 
get together with the Community's associated part­
ners to draw up as soon as possible a convincing 
blueprint with a clearly defined timetable for the 
restructuring of the steel industry in Eastern Europe 
and a correspondingly gradual liberalization of the 
steel markets. The blueprint should not only satisfy 
steel undertakings on both sides but should also be 
suitable for inclusion in the free-trade area agree­
ments in conformity with GATT. 
The Committee believes that the solution to the 
problem of steel supplies would be to dispense with 
No C 339/46 Official Journal of the European Communities 31. 12. 91 
voluntary restraint agreements with our three part­
ners in Eastern Europe after a transitional period 
which would make sufficient allowance for the 
restructuring and rationalization of their steel indus­
tries. At the same time, the Community's Eastern 
European partners would have to agree to stop 
non-GATT compatible practices in their trade with 
Community countries. This would be achieved in 
particular by accepting the ECSC rules on aid. 
— The Committee understands the reasons for the 
compromise proposal to suspend import duties 
on coal during the first five-year period of the 
European Agreements, after which quotas and 
similar measures should be applied more flexibly 
—subject to constraints set out in the Agree­
ments—with a view to their complete elimination 
by the end of the ten-year transitional period. 
— Since agricultural products have a vital role to play 
in the foreign trade of the three Eastern European 
countries, the Committee agrees with the European 
Commission that these three associated countries 
and the Community will have to make mutual con­
cessions regarding agricultural products covered by 
EC market regimes. In agreeing on concessions, 
account will have to be taken of the sensitivity of 
the products, the common agricultural policy and 
the outcome of the GATT Uruguay Round. In this 
connection, the European Commission must ensure 
that the difficult problems associated with the com­
mon agricultural policy (CAP) are not aggravated. 
— The Committee welcomes the accompanying 
measures proposed in connection with the creation 
of a free-trade area. It assumes that the GATT anti­
dumping and subsidy codes will be fully observed. 
It also thinks that the Eastern European partners 
should align their national competition law as close­
ly as possible on the corresponding Community 
rules from the outset. In addition, it endorses their 
call for cumulative rules of origin. 
The Committee approves the inclusion of policies on 
the free movement of persons, services and capital 
in the European Agreements, but warns that certain 
passages in the Agreements have been made too abstract 
in an attempt to achieve a compromise. 
In the case of the free movement of persons, the Com­
mittee regrets that there are no arrangements covering 
workers from Czechoslovakia, Poland and Hungary 
working illegally in the Community. Community rights and obligations affecting residence, employment and 
mobility should apply without restriction to legal immi­
grant workers and their families. 
The Committee thinks that the proposal to facilitate 
the immigration of workers as from the second stage 
of the ten-year transitional period, but under certain 
conditions, should be accompanied by a reference to 
the fact that the Community has limited scope for 
action, even in the medium term. 
In view of the redundancies brought about by reform 
in the Eastern European States, the West must not only 
provide financial and technical aid, but also ensure 
sustained support for the necessary training of workers. 
Whilst the Committee endorses in principle the arrange­
ments on freedom of establishment, it feels that 'dra­
matic' reductions in the domestic market shares of 
our Eastern partners can scarcely be a justification for 
protectionist measures. 
With regard to the freedom to provide services, the 
Committee supports the proposed liberalization but 
assumes that the Association Council will at all times 
prevent social dumping. 
The Committee regrets that the negotiating parties have 
not yet agreed on a timetable for the liberalization of 
capital movements which would clearly indicate when 
various categories of financial transaction are to be 
integrated into a 'fully liberalized system'. 
The Committee regrets that the draft agreements fail 
to fix priorities for the approximation of legislation in, 
for example, the fields of environmental, competition 
and subsidy law and in respect of worker and consumer 
protection. The 'two-stage concept' should have been 
specified in the relevant passages of the agreements. 
With regard to economic cooperation, the Committee 
welcomes the explicit assurance of the contracting part­
ners that the environmental aspects of economic 
measures will be taken into consideration from the 
outset. Environmental policy affects the whole of Euro­
pe and must be integrated with other policy areas. 
At the same time, the Committee feels justified in 
questioning whether joint projects can be implemented 
in all the (approximately 150 economic) areas specified 
in the nineties. It therefore calls for a rigorous action 
plan based on attainable priority objectives. In the first 
instance, these should relate to such areas as infrastruc­
ture, nuclear power and education and training. 
The Committee thinks that clear financial cooperation 
priorities should likewise be agreed with the Eastern 
European partners and taken into account in drawing 
31. 12. 91 Official Journal of the European Communities No C 339/47 
up multi-year plans. It also calls for the creation of a 
Community Task Force to supervise all the aid provided 
(a) by the Community (including bilateral assistance), 
(b) other countries of the Orgranization for Economic 
Co-operation and Development (OECD) and (c) inter­
national finance institutions, and to monitor the use to 
which it is put, to correlate funding and spending 
in the Association Committee and to monitor how 
efficiently resources are used in conjunction with the 
Eastern European partners. The Association Council 
should be regularly informed of the results of these 
activities. 
1. Introduction 
1.1. At a time of major political changes and regener­
ation in the countries of Central and Eastern Europe, 
where the aim is to introduce market economies and 
democratic social systems under which these countries 
can make serious efforts to liberalize foreign trade and 
become an integral part of the world economy, the 
Committee believes that the historic opportunity must 
be seized to forge closer and more stable relations with 
these countries and lay the foundation for a Europe, 
for a Common European House which accepts all Euro­
pean countries and leaves no one outside in the cold. 
1.2. The Economic and Social Committee has ana­
lyzed the radical, complex changes taking place in Cen­
tral and Eastern Europe in a number of Opinions. The 
Committee's aim in the past has been: 
— to obtain a picture of the likely economic and social 
impact of political reforms in neighbouring Central 
and Eastern Europe countries, 
— to assess the measures already taken by the Euro­
pean Community (a) as an emergency response and 
(b) to put relations with Eastern Europe on a new 
footing, 
— to draw up recommendations on the economic and 
social strategies to adopt towards Central and East­
ern European countries both immediately and in the 
medium term(1). 
In the middle of 1990 the Section for External Relations, 
Trade and Development Policy followed these Opinions 
up with an Information Report on the current economic 
and social situation in eight Central and Eastern Euro­
pean countries (2). In November of the same year the 
Committee delivered an Opinion on the European 
Commission's Communication on The Community and German Unification (3). This latter Opinion also 
emphasizes the Committee's positive attitude to the 
reform movements in Central and Eastern Europe. 
1.3. Developing and strengthening democratic struc­
tures, as well as opening up frontiers, is of vital import­
ance if political, economic and social cooperation with 
our Central and Eastern European neighbours is to be 
intensified. Only through cooperation will mutual trust 
be created and only through cooperation can this cli­
mate of trust be consolidated and further improved. In 
this respect the prospects for cooperation are now much 
brighter than hitherto seemed possible. 
1.4. The Committee considers that top priority in 
the widest sense of the term should be given to removing 
economic and social imbalances between the Western 
and Eastern halves of Europe. After the ups and downs 
of oil prices in the seventies and the debt crisis of the 
eighties, this is the third big challenge of the second 
half of the twentieth century. The Committee believes 
that if we act with perseverance and if our common 
interests are presented convincingly, promising sol­
utions can be found. It nevertheless recognizes that it 
will take longer than the present decade to fully meet 
this challenge. 
1.5. Nothing is more absurd than a situation where 
people with exactly the same capabilities, intelligence 
and application live in prosperity and enjoy high living 
standards in one half of Europe whilst there are fre­
quently shortages and poverty in the other half. The 
most striking example of this is the contrast between 
the Federal Republic of Germany and the former GDR, 
where people with the same history, language and tra­
ditions have worked for more than forty years under 
different political and economic systems. If the results 
have differed so widely, this is clearly not because of 
some human factor but because the systems themselves 
have varied a great deal in terms of efficiency. 
1.6. The growing interdependence of the world econ­
omy, the mutual dependence and close interweaving of 
political, economic and social aspects, reinforce the call 
for a transformation of the systems of Central and 
Eastern European countries, for a changeover to free 
market economies (with social components). What is 
required is a courageous reform policy which does not 
get bogged down in small-scale measures. The road 
from a socialist command economy to a social market 
economy is hard and strewn with obstacles. The setting 
of quantitative goals, state planning targets and the use 
of money solely as a bookkeeping unit of account (as 
happened in intra-Comecon trade for years) have had 
all sorts of negative consequences which cannot be 
eliminated overnight. 
(J) OJ No C 175, 4. 7. 1988, OJ No C 124, 21. 5. 1990. 
(2) Doc. ESC 492/90. (3) OJ No C 41, 18. 2. 1991. 
No C 339/48 Official Journal of the European Communities 31. 12. 91 
1.7. The European Community should also remem­
ber that although the social market economy is rooted 
in firm principles, it can be applied flexibly. The social 
market economy is a necessary if not sufficient prerequi­
site for pluralistic democracy, respect for human rights 
and freedom of speech. It is also important to bear 
in mind that despite many features in common each 
individual country runs its economy under different 
conditions and in accordance with different traditions. 
Diversity on the continent of Europe is a reality, the 
result of political decisions and different historical pro­
cesses. Every European nation will therefore go its own 
way and will have to find its own answers to the 
challenge of change. 
2. Macro-economic prospects in Central and Eastern 
Europe 
2.1. The democratic and economic reforms in Cen­
tral and Eastern Europe have made the Eastern econ­
omic union, the Council for Mutual Economic Aid 
(Comecon), an empty shell. The formal dissolution of 
Comecon—decided at its 46th and last plenary session 
at the end of June this year—marked the end of a 
process of decline which had begun in the mid-Eighties. 
Since then, visible intra-Comecon trade had been 
shrinking. In 1990, two of its cornerstones (multilateral 
cooperation and the co-ordination of national econ­
omic planning) were abandoned. German unification 
removed one of the reasons for Comecon's existence 
and when, in January 1991, the members finally decided 
to conduct intra-Comecon trade in dollars rather than 
transfer roubles (the common unit of account), 
Comecon was to all intents and purposes disbanded. 
As yet it is unclear whether the countries concerned 
will develop a new form of (close) economic cooper­
ation. There has been a wide variety of proposals. 
Many politicians advocate a successor institution, such 
as an 'Organization for international economic cooper­
ation', whilst others quote the example of the Western 
European Payments Union (EPU), established in 1950, 
which provided clearing and credit facilities for its 
member countries. It would, however, seem more 
realistic in the first instance to establish only a consulta­
tive forum to regulate cooperation between former 
Comecon members situated in Europe. At the beginning 
of February 1991, the three reformist States—Hungary, 
Poland and Czechoslovakia—meeting in Visegrad in 
Hungary decided on the route to be taken. They agreed 
to cooperate closely with a view to bringing their overall 
economic performance up to the Western European 
level and developing stable democratic relations follow­
ing the collapse of the communist system. Hungary's 
Prime Minister, Josef Antall, defined the common 
objective as 'complete integration in the European pol­
itical, economic, security and legal system'. 2.2. Democracy and dictatorship, the social market 
economy and the planned economy are antithetical 
concepts which cannot be reconciled by any 'third way'. 
Certain Eastern European countries have recognized 
this and promptly initiated the indispensable process of 
reform, whereas others are still searching for the right 
plan. They are struggling with a trial-and-error 
approach involving a 'policy mix' based on planning 
and control mechanisms combined with half-hearted 
reforms. Such a policy cannot solve economic and social 
problems. On the contrary, it merely obstructs the 
indispensable structural adjustment of the economy, 
deferring it to what hardly seems likely to be an easier 
future and thus intensifying the problem. 
The inherent weaknesses of the Eastern economic sys­
tem—technology gaps, productivity lag, lack of capital, 
wasted resources, environmental pollution, supply 
shortages and character deficiencies (independence, cre­
ativity)—are obvious and largely undisputed. More­
over, experience in the former GDR confirms that 
transition to a social market economy is a far more 
radical process than expected—even a few months ago. 
Notwithstanding massive economic and financial aid, 
the overall economic situation in the new Federal 
Lander is still characterized by falling production and 
employment. Whether the hoped-for upturn will occur 
by the end of the year is far from certain. This makes 
it all the more urgent to know how long other reformist 
countries are likely to need to switch from a planned 
to a social market economy. A Conference Board study 
mentions twenty to thirty years, whilst the Centre for 
Economic Policy Research suspects 'that ten years is 
the minimum time-span that will be required by the ... 
East European reform process, with two or three dec­
ades being perhaps a more realistic estimate'^). 
A more optimistic note is sounded in a Prognos study 
which outlines development scenarios for eight Eastern 
European countries and provides a qualitative analysis 
and evaluation of the individual factors involved (2). 
Proceeding from the (reasonable) assumption that 
macro-economic development will follow a J curve, 
this Institute distinguishes three phases: contraction, re­
orientation and growth. The intensity and duration of 
the individual phases will differ from country to 
country. In addition to the former GDR, Hungary, 
Poland and Czechoslovakia enjoy favourable conditions 
which should enable them to succeed in the difficult 
(*) 'The Impact of Eastern Europe monitoring European Inte­
gration', in: Annual Report 1990, Centre for Economic Policy 
Research, London 1991. 
(2) Entwicklungspotentiale im Osten — Standorte und Markte, 
Prognos AG, Europaisches Zentrum fur Angewandte Wirt-
schaftsforschung, Basel 1991. 
31. 12. 91 Official Journal of the European Communities No C 339/49 
task of transforming the system. The Institute thinks 
that the recovery process could produce tangible results 
in two to three years in those three countries with the 
possibility of significant economic growth (above 4%) 
in the second half of the nineties. 
Prognos considers that the conditions for economic 
stabilization are 'far less favourable' in the case of the 
USSR. Here, the economic reform process is compli­
cated and has not become any simpler after the failed 
putsch. The construction of a 'new democratic system' 
is still in the midst of being carried out. The economic 
union which the Soviet Republics would like to see has 
so far only been sketched out in rough outlines. No 
doubt each of the sovereign Republics will 'work out 
and implement its own programme for the transition to 
the market system', in accordance with the compromise 
programme 'Guidelines for economic stabilization and 
transition to a market economy' approved in October 
1990. This means that the individual Republics will 
move towards the market economy at different 
speeds (1). In fact there is a possibility that in individual 
Republics unfavourable political factors (e.g. national­
ist conflicts and the resistance of doctrinaire elements) 
will also impede the establishment of reliable market-
orientated structures. Any attempt to limit, with any 
degree of reliability, the time needed for economic 
stabilization and the application of market principles 
in the USSR, is therefore bound to fail. The words of 
Mikhail Gorbachov spoken in February 1991 remain 
relevant: 'We cannot change to a market economy 
overnight; that would be too risky. Soviet society must 
be prepared. There will then be a transitional period, 
and this will last for some time.' 
The other former European Comecon States (2) are 
Bulgaria and Romania. Since the industries of both 
countries were fully integrated in the division of labour 
of Comecon, they possess neither 'the technical 
resources nor the qualification which would enable 
them to participate in future-oriented structural devel­
opments'. Prognos thinks that the two economies will 
contract for several years, which will involve increasing 
scarcity and, possibly, political problems. Although the 
two economies could begin to stabilize in the second 
half of the nineties, the Institute does not think that 
higher growth rates can be expected for the time being. 
(*) J. Joudanow, 'Die wirtschaftliche Umgestaltung in der 
Sowjetunion: Probleme und Wege zur Losung' in: Beitrdge 
zur Wirtschafts- und Sozialpolitik, 190, Institut der deutschen 
Wirtschaft, Koln 1991. 
(2) No macro-economic projections exist as yet for the three 
Baltic States with their approximately 8 million inhabitants. 
In the Prognos study of December 1990 they are still regarded 
as members of the 15 Soviet Republics. Both countries seem likely to face a race against time 
which can be won only if the driving forces of a new 
economic and social order are released as quickly as 
possible—and at all levels—by a convincing change of 
direction. 
Obviously, the political and economic imponderables, 
the numerous procedural and statistical inadequacies 
and lack of knowledge about the depth and extent of 
the reforms initiated make it hazardous to try and 
define the likely duration of the economic transform­
ation process in Eastern Europe. The probability of 
error is certainly far beyond the level accepted in con­
ventional long-term macro-economic projections 
which, in the majority of cases, amount to no more 
than the extrapolation of (simple) trends. At the same 
time, attempts to forecast the intensity and duration of 
the reform process have their value. They at least con­
firm and provide empirical evidence for the belief that 
the political and economic transformation of certain 
Eastern European countries cannot be completed in the 
nineties and seems likely to be prolonged some time 
into the next century. 
2.3. The Committee has repeatedly welcomed the 
wide-ranging support and encouragement provided by 
the Community for the reform process, either through 
trade and cooperation agreements or under the multilat­
eral support programme of the Group of 24 which the 
Commission has been coordinating on behalf of the 
Paris Economic Summit since mid-1989. In this connec­
tion, the Committee recommends the early establish­
ment of an inventory of all Community aid including 
the numerous forms of bilateral aid to Eastern Europe. 
Discussions should be held with the Member States 
with a view to identifying how this assistance can best 
be coordinated and used even more effectively. Such 
aid should also be made increasingly available to those 
of our Eastern European neighbours which are just 
beginning to initiate political, economic and social 
reforms. The Committee unanimously agrees that any 
EC economic or technical assistance should be made 
conditional on respect for human rights, consti­
tutionality and the protection of ethnic minorities. 
There are signs that political reform could be used as 
an excuse for renewed discrimination against ethnic 
minorities in certain Central and Eastern European 
countries. 
3. From the joint declaration to European agreements 
3.1. After year-long efforts a joint declaration was 
signed on 25 June 1988 between the European Com­
munity and the Council for Mutual Economic Assist-
No C 339/50 Official Journal of the European Communities 31. 12. 91 
ance (CMEA). Although the declaration was limited to 
matters of procedure, the Committee sees the agreement 
as a decisive step towards the long-awaited normaliza­
tion of relations between the European Community and 
individual CMEA countries. The Community's two-
track approach had finally won the day: in parallel with 
the establishment of official relations between the EC 
and the CMEA, each individual CMEA country is able 
to take its own decisions on the establishment of diplo­
matic relations and on the opening of trade negotiations 
with the European Community. At the same time this 
finally put an end to the CMEA's repeated call for an 
EC/CMEA umbrella. 
3.2. Diplomatic relations and the conclusion of trade 
and co-operation agreements with practically all Cen­
tral and Eastern European countries over a period of 
less than two years (September 1988-May 1990) consti­
tute the foundations of the new European edifice. The 
cornerstones of such agreements are the liberalization 
of Community imports and the gradual removal of 
quantitative restrictions by 1995. The Committee con­
siders that such agreements are a possible means of 
strengthening inter-State dialogue; they are also calcu­
lated to provide an economic underpinning of the politi­
cal reforms underway in the countries of our Eastern 
European neighbours. At its meeting in Dublin towards 
the end of June 1990 the European Council also 
'expressed its deep satisfaction at the progress already 
made and the prospect towards overcoming the div­
isions of Europe and restoring the unity of the continent 
whose peoples share a common heritage and culture'. 
3.3. There is no doubt that first generation agree­
ments have paved the way for the next stage in the 
process of pan-European integration, namely the raising 
of co-operation with Central and Eastern European 
countries to a new and improved level. Our neighbours 
in Central and Eastern Europe have, as the European 
Commission itself explains, recognised that relations 
between the Community and the European Free Trade 
Association (EFTA) have been moving in an encourag­
ing direction, and have declared that they too would 
like to be involved more closely in a process leading to 
the ever-closer integration of the economic areas of the 
Community and EFTA. 
3.4. Acting in a spirit of solidarity with democratic 
forces in Central and Eastern European countries, but 
also in the interests of the Community, the European 
Commission has drawn up an outline plan for Associ­
ation Agreements. This outline plan was approved by 
a special meeting of the European Council at the end 
of April 1990. The main objectives of these new agree­
ments with our Central and Eastern European neigh­
bours are as follows: 
— to create a climate of trust and stability favouring 
political and economic reforms, — to consolidate the basis for a new European order, 
— to lastingly improve the trade and investment cli­
mate, 
— to promote the transition towards competitive econ­
omic structures and make it easier for them to 
be part and parcel of the international division of 
labour, 
— to improve the transparency and coherence of the 
Community's financial aid schemes, and to make 
them more flexible, 
— to step up the exchange of information and cultural 
co-operation. 
The Committee welcomes the association concept since 
it is, ipso facto, likely to guarantee and expedite the 
establishment of closer political, economic and social 
relations between the European Community and our 
neighbours in Central and Eastern Europe. 
3.5. The agreements at the same time form an insti­
tutional framework for political dialogue, capable of 
including exchanges of views about pressing bilateral 
and multilateral problems. The Committee is of the 
view that intensive East-West political dialogue, based 
on mutual trust, is of paramount importance at a time 
when new forms of co-operation are taking shape in 
Europe and there is talk of building a 'Common Euro­
pean House'. Taking up this metaphor of the Common 
European House, Mikhail Gorbatchov said back in 
1985: 'We live in a common house although some use 
one entrance and some another. We must work together 
to make sure that people in this house talk to one 
another.' This statement underscores the Soviet Union's 
new policy, adopted at the 27th Congress of the Com­
munist Party of the Soviet Union (CPSU), of focussing 
more attention on Europe. A positive role has also been 
played by perestroika, the aim of which is of course 
the introduction of a series of reforms designed to make 
the bureaucratic-dictatorial system in the Soviet Union 
'less ossified and more open, transparent, flexible and 
effective'. 
3.6. The second generation agreements, more cor­
rectly termed European Agreements on account of the 
inclusion of political dialogue, may in principle be 
concluded with any Central and Eastern European 
countries for an indeterminate period of time. Nat­
urally, in the case of the Soviet Union (a world power 
with global responsibilities) or the Federation of Demo­
cratic States (after the entry into force of the new Treaty 
of Union), it is necessary to work out a carefully tailored 
approach taking into account not only the particular 
geographical and economic situation of the Republics, 
but also the interests which are likely to be shared 
31. 12. 91 Official Journal of the European Communities No C 339/51 
between the European Community and the planned 
Economic Union. 
3.7. The Committee considers that it should be poss­
ible in the next few years to build up a network of 
European Agreements with the Community's Eastern 
neighbours. At the same time it urges that concrete 
negotiations be got under way as soon as possible with 
the Baltic States of Estonia, Latvia and Lithuania with 
a view to concluding European Agreements. 
Given the content and political importance of European 
Agreements, the European Commission considers that 
the appropriate legal base is EEC Treaty Article 238 
which empowers the Community to conclude agree­
ments 'establishing an association involving reciprocal 
rights and obligations, common action and special pro­
cedures'. However, since the concept of 'association' 
eludes a universally applicable definition, the European 
Commission has come up with a more concrete defi­
nition of the content of European Agreements in 
advance of the bilateral association negotiations, by 
saying that such (preferential) agreements regulate com­
prehensive mutual obligations whereby the associated 
country accepts certain regulations and practices in 
existence in the Community. 
Before such Agreements can be concluded, two con­
ditions must be fulfilled in the countries applying for 
association with the Community: the rejuvenation of 
political, social and economic life must be proceeding 
satisfactorily in the associated countries and the point 
of no return must have been reached with regard to the 
introduction of democracy and the market economy. 
The Committee takes it for granted that the European 
Commission will continue its careful, comprehensive 
monitoring of political and economic reforms and will 
analyze their chances of success impartially. Only when 
this has been done should association negotiations 
proper be opened. It would in fact be disastrous if intra-
Community consolidation—Single Market, Economic 
and Monetary Union, Political Union—were unnecess­
arily delayed or even watered down because the success­
ive steps towards pan-European integration had been 
inadequately prepared. 
3.8. The common framework for European Agree­
ments consists principally of: 
— political dialogue, 
— free movement of goods, 
— free movement of persons, services and capital, 
— approximation of legislation, 
— economic co-operation, 
— cultural co-operation, 
— financial co-operation, 
— institutions of association. The advantages of the European Commission's com­
mon framework are self-evident. On the one hand it 
provides a firm foundation for all European Agree­
ments; on the other hand it is sufficiently flexible to 
accommodate the particular features and needs of 
associated countries. Only through flexibility can due 
account be taken of the varying speeds of economic 
change in Central and Eastern European countries and 
only through flexibility can the process of forging closer 
links with the European Community be tailored to 
individual needs. With this in mind our Eastern neigh­
bours have pointed out that, after decades of 
oppression, the manner of their linkage to the European 
venture should take account of their individual situ­
ations and priorities. Ultimately this means that the 
main elements of the common framework are to be 
found in all European Agreements but may vary in 
terms of concrete expression. 
4. European Agreements with Czechoslovakia, Poland 
and Hungary 
4.1. Czechoslovakia, Poland and Hungary declared 
at an early stage that they were seeking association 
with the European Community and would later be 
applying for full membership. As early as late August 
1990 the European Community proposed exploratory 
talks with these States which had made most progress 
towards political democratization. In the meantime all 
three States have indicated to the Community that their 
political reforms have by and large been completed. 
The Committee endorses the opening of association 
negotiations with these three States. It approves in 
principle the content of the draft treaties negotiated so 
far provided its own critical comments and recommen­
dations are duly heeded. 
Preamble 
4.2. The Committee would underline the determi­
nation of the contracting partners, as expressed in the 
preamble to the Agreements, to establish close and 
lasting relations on the basis of mutual interest, to help 
the strengthening of political and economic freedoms 
and to hold regular political talks on bilateral and 
multilateral questions. The Committee particularly 
appreciates the willingness of the contracting parties to 
act in unison to assist the transition to a new political 
and economic order in the young democracies of Cen­
tral and Eastern Europe. The foundations of this new 
order are the rule of law, respect for human rights, the 
creation of a multi-party system, free and democratic 
(secret) elections, economic liberalization in accordance 
with market principles and social justice. The Com-
No C 339/52 Official Journal of the European Communities 31. 12. 91 
mittee welcomes the explicit support of the contracting 
parties for the results of the Helsinki Conference on 
Security and Co-operation in Europe (CSCE) and the 
principles enshrined in the final acts of subsequent 
CSCE conferences. The Committee urges that these 
very general passages of the preamble to the European 
Agreements be expressed in more concrete terms and 
amplified to include declarations by the Bonn CSCE 
Conference on 'Economic Co-operation in Europe'. 
Merely referring to the conclusions of this conference 
is too vague and lends itself to widely different interpret­
ations. 
4.3. The Committee would appeal to the contracting 
parties to also refer in the preamble to the social dimen­
sion of European unification and to mention the Com­
munity Charter of the Fundamental Social Rights of 
Workers adopted, albeit not unanimously, by the Heads 
of State or Government of the European Community 
in December 1989. This Charter, as Jacques Delors 
himself points out, 'will form a keystone of the social 
dimension in the construction of Europe in the spirit 
of the Treaty of Rome supplemented by the Single 
European Act't1). Closer relations with our Eastern 
neighbours, and Community assistance, should not be 
confined to economic, technical and financial fields but 
should also adequately take into account the many 
different social aspects. 
Given the social and cultural conditions prevailing in 
Europe today, an 'economic area' which is not at the 
same time a 'social area' would be unthinkable. This 
should be remembered in particular by those politicians 
in neighbouring Central and Eastern European 
countries who claim that a market economy can be 
established without the adjective 'social'. The Com­
mittee is convinced that a social market economy and 
the spirit of a People's Europe are central pillars of 
political and social progress towards European Union. 
They must be seen as essential elements of Community 
policies. The two factors do much to explain the appeal 
which the European Community has for the fledgling 
democracies of Eastern Europe. 
4.4. In the interests of establishing the necessary 
climate of confidence, the Committee supports the con­
tracting parties of Eastern Europe in their desire to 
incorporate in the preamble their wish to become mem­
bers of the Community. Such a step would also make 
it clear that both sides are serious about establishing 
much closer relations in due course. The Committee, 
however, is unable to go along with the European Parliament's suggestion that a time schedule for EC 
membership applications should be included in the pre­
amble of each European Agreement. It is not yet poss­
ible to foresee with any real accuracy what road econ­
omic reforms will take in individual Central and Eastern 
European countries, so concrete dates for accession 
negotiations cannot be fixed at present. 
4.5. The Committee further proposes that the pre­
ambles should contain a statement to the effect that 
the contracting parties of Central and Eastern Europe 
unconditionally accept the acquis communautaire and 
undertake to approximate their respective countries as 
closely as possible to the current level of Community 
integration over the two five-year stages envisaged: 
What the procedure will be during the period of validity 
of European Agreements when European integration 
and Community legislative systems move further ahead 
remains to be seen. According to existing Treaty legis­
lation, associated countries can neither be 'accepted as 
lower-grade' members nor participate meaningfully in 
the European Community's decision-taking process. 
'The Community's decision-making process cannot be 
fragmented without undermining the Community itself 
with its delicate built-in balance' (2). On the other hand 
some policy areas require a global European approach 
more than ever before, with trans-European networks 
urgently needed in the fields of energy, transport and 
telecommunications Given this background, Frans An-
driessen has recently proposed that applicants for EC 
membership be made members (with seats and votes) 
for the purpose of those areas (energy, transport and 
telecommunications once more) where they are able to 
accept the appropriate rights and obligations without 
difficulties. The Committee supports this proposal and 
calls upon the European Commission to find a way out 
of the dilemma and offer a compromise which will both 
satisfy European economic policy requirements and be 
compatible with Community law. 
4.6. The Committee welcomes the willingness of the 
contracting parties to uphold the principle of free trade 
and abide by GATT provisions in particular. There is 
no doubt that GATT will carefully monitor European 
Agreements to see whether they are compatible with 
the General Agreement on Tariffs and Trade. In view 
of the conspicuous problems which have emerged in 
the Uruguay Round since early 1987—and which are 
still partly the subject of controversy—the Committee 
is aware that the contracting partners find themselves 
in a difficult situation. Without going into details there 
are chiefly two types of problems deserving of particular 
attention: (a) provisions governing the material pre­
conditions for the creation of free-trade areas (to be 
gone into later); (b) the further expansion of regional 
(!) ISBN 92-826-097.3-1. (2) P. Gilsdorf, 'Assoziierungsabkommen der Europaischen Wirt-
schaftsgemeinschaft: Entwicklung und Perspektiven' (Vor-
trage, Reden und Berichte aus dent Europa-Institut, Nr. 220.) 
Saarbrucken, 6 July 1990. 
31. 12. 91 Official Journal of the European Communities No C 339/53 
associations. This phenomenon by no means exists 
solely in Europe since regional associations of countries 
with similar or identical economic objectives have also 
sprung up in other parts of the world. Integrated econ­
omic associations have in fact been set up in Central 
and South America with the Latin American Free Trade 
Association (LAFTA), in Africa with the West African 
Economic Community (CEAO), and in Asia with the 
Association of South East Asian Nations (ASEAN). All 
the signs are that the USA is in the process of setting 
up a North American Free Trade Area (NAFTA) which 
is intended—as emerged from the mid-term conference 
of the GATT Uruguay Round in Montreal—to act as a 
counterweight to the creation of a European Economic 
Area (EEA) and so be the 'biggest and richest free trade 
area in the world'. 
In other words, what was intended to be an exception 
when GATT was founded has now become the rule, 
and the idea of world trade organized on a multilateral 
basis is becoming more and more of a farce. The 
international division of labour is now increasingly 
influenced by the triad of economic giants: the USA, 
Europe and Japan. Because of this the European Com­
munity has come to bear a special responsibility for 
world trade. Article 110 of the Treaty establishing the 
EEC explicitly commits the Community, in the common 
interest, to a liberal trade policy. As an advocate of 
world trade the Community is now under increasing 
pressure. It must therefore help to ensure worldwide 
that subsidies which distort competition are cut back, 
and that strategies which restrict competition under the 
infamously-known catchwords of 'laser beaming and 
'industrial targeting" are in fact discontinued. Such 
practices are in clear contradiction with the verbose 
declarations made time and time again in GATT, the 
OECD and various 'world economic summits': The 
international division of labour will only achieve the 
best results for all concerned if it is accepted, without 
strings, under conditions of free markets and fair com­
petition. 
Political dialogue 
4.7. Political dialogue within the framework of the 
Association Council is designed to (a) make it easier 
for the associated countries to settle into the family of 
democratic nations, (b) increase the tempo at which the 
contracting partners of Central and Eastern Europe 
move in the direction of the European Community, and 
(c) widen and consolidate the consensus on inter­
national issues. Additional instruments and mechan­
isms help to underpin political dialogue, e.g. full use of 
diplomatic channels and inclusion of the associated 
countries within the group of countries regularly infor­
med about European political cooperation. 
The Committee sets great store by political dialogue 
and regards it as a pointer of pan-European integration. At a time when Eastern European economies and so­
cieties are being regenerated from top to bottom, con­
sultation and the exchange of information have a cru­
cially important role to play. Because of the regularity 
of the meetings within the Association Council, political 
decision-makers find that they have to justify and 
explain the decisions and measures they have taken. 
Anomalies can be corrected at an early stage and the 
discipline imposed by having to respect meeting dead­
lines tends to mean that measures can be introduced 
and implemented which whould otherwise have been 
delayed or never even taken because of conflicting 
domestic political interests—a problem the young 
democracies of Eastern Europe no doubt have to con­
tend with quite frequently. 
4.8. The creation of a Parliamentary Association 
Committee is welcomed by the Committee without 
reservations. As a forum for cooperation between mem­
bers of the European Parliament and parliamentarians 
of the associated countries, its main purpose is to facili­
tate an indepth exchange of information and ideas. In 
the current phase of closer European integration and 
multilateral cooperation, the importance of such an 
institution of political dialogue cannot be underesti­
mated, especially since the Association Committee is 
also entitled to make recommendations to the Associ­
ation Council. 
4.9. The Committee calls on the contracting parties 
to ensure that economic and social interest groups are 
brought within the organizational framework embrac­
ing institutions of association. Even the Commission 
seems to have come to the realization that there is no 
chance at all of creating a pan-European economic area 
if economic and social interest groups are kept in the 
background. Such groups are vital elements of a plural­
istic society and pillars of Europe's social and political 
life. The Committee therefore proposes that a consulta­
tive committee be set up within the institutional frame­
work. The new body, consisting of members of the 
Economic and Social Committee and members of a 
similar grouping in the associated countries, would be 
consulted by the Association Council on economic and 
social questions which relate to the European Agree­
ments and are of common interest. The consultative 
committee should also be given the right of initiative 
so that its members could, on their own initiative, take 
up urgent social and economic issues associated with 
pan-European integration and put forward constructive 
proposals. 
Free movement of goods 
4.10. Generally speaking, the European Agreements 
provide for a transitional period of no more than ten 
years, divided into two large five-year slices. The Com­
mittee is pleased that the Association Council intends 
to regularly monitor observance of the Agreements and 
No C 339/54 Official Journal of the European Communities 31. 12. 91 
keep a permanent eye on the progress of economic 
reforms in the associated states, particularly in the fields 
of price-formation, subsidies, monetary policy and 
foreign trade. At the same time the Committee regrets 
the decision taken in the course of negotiations not to 
apply the two-stage approach to the liberalization of 
the movement of goods. As far as foreign trade in 
industrial goods is concerned, a stage-by-stage 
approach—enabling the course of further market lib­
eralization to be reviewed at the end of the first five-
year period—would have been of intrinsic value and 
crucial importance. 
4.11. A step-by-step, asymmetrical approach is to be 
adopted in connection with the setting up of a free-
trade area within no more than ten years. The European 
Community itself intends to make faster progress 
towards free trade, abolishing customs duties and other 
trade barriers for its associated partners within a period 
of five years, although taking into account the degree 
of sensitivity of individual products. Special rules are 
to apply to textiles, ECSC products and agriculture. The 
Committee supports the Community's asymmetrical 
approach without reservation but wonders whether 
five years are needed to throw open the Community's 
markets completely to industrial goods from Eastern 
Europe. Given the major restructuring problems facing 
these countries, the Community should consider 
whether more convincing efforts should not be made 
to open up its markets by the time the treaties come 
into force. It should not forget that increased earnings 
by the reform-states' export sectors are a crucial precon­
dition for continuing economic reorganization, the 
development of the necessary innovative and investment 
dynamic and greater competitiveness. 
The contracting parties in Eastern Europe will likewise 
wish to proceed on a step-by-step basis, but will pre­
sumably need the whole ten-year period in which to 
liberalize. The Committee considers that adoption of 
the Combined Nomenclature in its entirety will ensure 
that trade between the contracting parties is conducted 
as smoothly as possible. It would be helpful if a time­
table for its adoption could be laid down in the Agree­
ments and if the associated states could make a rapid 
start on the necessary reorganization of their customs 
and foreign trade administrations. 
The Association Council would be able to accept dero­
gations in the case of fledgling industries or sectors 
having to contend with serious social problems or pain­
ful structural adjustments, but only for a limited period 
and only provided precise criteria were met. The Com­
mittee endorses the derogation provisions but feels that 
they should not be applicable beyond the ten-year tran­
sitional period. 4.12. Sensitive sectors (textiles, ECSC products and 
agriculture) are covered by additional protocols con­
taining provisions which take into account individual 
sectoral needs. The Committee would recall in this 
connection the relevant GATT provisions, i.e. the 
material pre-requisites for the creation of free-trade 
areas. In the view of the Committee these provisions 
are primarily concerned with the requirement to abolish 
customs duties and other trade regulations restricting 
trade in both directions between the contracting parties 
for 'substantially all trade' (Art. XXIV 8b GATT). In 
the long run no sector can be protected from the open 
market if there is to be compliance with GATT. 
4.12.1. After expiry of the Multifibre Arrangement 
(MFA) in mid-1991, and the termination of the associ­
ated bilateral voluntary restriction agreements at the 
end of this year, a new framework will have to be 
created within the European Agreements for trade in 
textiles. This must provide for improved market access, 
taking due account of developments in visible trade 
with the associated partners (including the former 
GDR). Initially, there will presumably be 'interim 
arrangements', which will remain in force until the 
GATT negotiations on the future of the MFA (e.g. a 
transitional period in which this is phased out) have 
been completed and the inclusion of textiles and cloth­
ing in GATT has been decided. Initial reports on the 
content of the additional protocol indicate that customs 
duties will be phased out over seven years. Discussion 
of a further reduction in quantitative restrictions will 
commence as soon as the results of the Uruguay Round 
with regard to textiles are known. Here, too, the Com­
mittee wonders whether a speedier opening up of mar­
kets than originally planned might not be beneficial to 
both sides. In this case, the Community's three Eastern 
European partners would have to expressly renounce 
state subsidies and fully open up their textile and cloth­
ing markets to Community products, albeit with a 
(reasonable) delay. 
Particularly in the case of outward processing traffic, 
the liberalization schedule could be improved by pro­
viding for customs duty exemptions from the time the 
Agreements come into force. Measures would neverthe­
less need to be taken to ensure adherence during the 
interim to the basic principles enshrined in the EC 
Regulation establishing economic outward processing 
arrangements applicable to certain textile and clothing 
products (1). 
4.12.2. The steps to be taken to liberalize ECSC 
products will be dealt with in a second additional 
protocol. 
(x) OJ No L 76, 20. 3. 1982. 
31. 12. 91 Official Journal of the European Communities No C 339/55 
4.12.2.1. In the steel sector, this will involve not 
only the dismantling by both sides of customs duties 
and charges having an equivalent effect, but also the 
abolition of national import quotas in the Community 
and the future of the steel-supply agreements with 
the Community's Eastern European partners which 
expire at the end of this year. These partners are 
calling for the complete liberalization of their steel 
exports to the Community. In the Committee's view, 
however, voluntary export restriction agreements, 
national quotas and customs duties are closely inter­
twined and—bearing in mind the subsidies in Eastern 
Europe—must be dealt with as a whole. As it is, 
adjustment is already causing the Community's part­
ners in Eastern Europe economic and social problems, 
and these would be exacerbated considerably if the 
Community steel industry were to be obliged by the 
immediate lifting of all import restrictions to take 
across-the-board defensive action under GATT against 
the dumping of subsidized imports from Eastern 
Europe. The Committee therefore thinks that the 
Commission must get together with the Community's 
associated partners to draw up as soon as possible a 
convincing blueprint with a clearly defined timetable 
for the restructuring of the steel industry in Eastern 
Europe and a correspondingly gradual liberalization 
of the steel markets. The blueprint should not only 
satisfy steel undertakings on both sides but should 
also be suitable for inclusion in the free-trade area 
agreements in conformity with GATT. 
When the customs duties and charges having a similar 
effect are dismantled (the schedule has not yet been 
finalized), the fact that external customs duties for 
ECSC products are now low by world standards should 
be borne in mind. According to reliable estimates their 
weighted average is just below 5%. Given that most 
rates of duties in the associated countries have not yet 
been bound, the Committee suggests that during the 
ten-year transitinal period the requisite harmonization 
measures be introduced first as part of the blueprint, 
with the customs duties not being completely abolished, 
on the basis of reciprocity, until later (e.g. after five 
years). 
Germany, Italy and the Benelux countries have national 
quotas of their own for certain steel imports from 
Central and Eastern Europe. These quotas, taken in 
conjunction with the Community agreements on steel 
supplies, have the effect of setting unduly low quotas for 
particularly sensitive products within the framework of 
overall ceilings laid down in the steel agreements. The 
decision has already been taken at a political level to 
extend the trade and cooperation agreements concluded 
in EEC Treaty areas to ECSC products, and this will 
result in the abolition of these national quotas. Since the association agreements will probably enter into 
force after the extension of the trade and cooperation 
agreements to ECSC products, the inclusion of a com­
mitment to abolish national quotas in the additional 
protocol for ECSC products is academic. 
Decisions about the future of the steel supply agree­
ments are proving to be extremely difficult. The agree­
ments apply, in each instance, for a period of one year 
and apart from pricing rules lay down quotas for each 
country's exports to the Community Member States. 
In return, the Community pledges not to initiate any 
anti-dumping or anti-subsidy proceedings. The Com­
mission has repeatedly stressed that current and future 
voluntary restraint agreements with Poland, Hungary 
and Czechoslovakia will not be affected by the Euro­
pean Agreements. The Committee thinks differently: 
in its view, volontary restraint agreements between 
partners in a free-trade area are what GATT calls 'grey 
area measures' which should be eliminated without 
delay. The Committee believes that the only solution 
would be to dispense with volontary restraint agree­
ments with our three partners in Eastern Europe after 
a transitional period which would make sufficient 
allowance for the restructuring and rationalization of 
the steel industry in Eastern Europe. At the same time, 
the Community's Eastern European partners would 
have to agree to stop all non-GATT-compatible prac­
tices in their trade with Community countries after the 
end of the transitional period. This would be achieved 
in particular by accepting the ECSC rules on aid. 
4.12.2.2. In the coal sector, the negotiations on the 
liberalization of imports from the associated states 
appear to be as complicated as the steel negotiations. 
Although coal imports have been liberalized in most of 
the EC Member States, a general import-authorization 
scheme based on quotas is operated by Federal Germ­
any and Spain; this does not apply to hard coal imported 
into the former GDR, which is free from duty. In the 
UK, import opportunities are also restricted by the 
fixed purchasing agreements in the field of coal-based 
electricity production. 
The Eastern partners are assentially seeking the removal 
of the German and Spanish import restrictions, and of 
measures having a simular effect. Examples of such 
measures are the German Iron and Steel Treaty (Hiit-
tenvertrag) and the Century Treaty. In 1985, the former, 
which obliges the steel industry to purchase some 
25 million tons of German coking coal annually was 
extended until the year 2000. Under the Century 
Treaty—which runs until the end of 1995—the elec-
No C 339/56 Official Journal of the European Communities 31. 12. 91 
tricity industry has undertaken to use approximately 
4 million tons of German coal per year for electricity 
production. 
Here, too, a compromise is undoubtedly called for. This 
must take account of the difficult structural adaptation 
process in coal mining, the expiry date of existing 
contracts and the relevant GATT provisions. A variety 
of compromises are under discussion. The Committee 
understands the reasons for a two-stage approach 
which can be fully implemented within the life of the 
European Agreement and which is in conformity with 
GATT. This would involve suspending import duties 
during the first five year period of the European Agree­
ments after which quotas and similar measures should 
be applied more flexibly during the second five-year 
period—subject to the constraints set out in the Agree­
ments—with a view to their complete elimination by the 
end of the ten-year transitional period. The compromise 
proposal, which takes account of industrial, employ­
ment and social factors should also be acceptable for 
our Eastern European partners. At all events the energy 
requirements of the associated states will increase as 
economic recovery proceeds. At the same time, the 
energy supply links between the former Comecon mem­
bers will be further loosened, so that it might reasonably 
be asked whether the associated countries will be in a 
position to significantly increase their coal exports to 
the Community in the foreseeable future. 
4.12.3. Processed agricultural goods not listed in 
Annex II to the EEC Treaty will be the subject of special 
provisions contained in a third additional protocol. 
Although not much is known about them as yet, the 
agreements will contain provisions on the dismantling 
of customs duties and charges of equivalent effect—and 
presumably on the abolition of quotas. Concessions 
with regard to trade in agricultural products based on 
balance and reciprocity and likewise expected. In the 
fisheries sector the Agreement with Poland will embrace 
trade, fishing rights and future cooperation, as part of 
a single package. Preferences will also take account of 
the EC-Poland fisheries agreement. 
The Committee is aware that agricultural products have 
a vital role to play in the foreign trade of the three 
Eastern European countries. It is essential for these 
countries—and particularly Poland and Hungary— to 
be able to earn hard currency by also exporting to the 
European Community agricultural products subject to 
EC agricultural market regimes. The Committee agrees 
with the European Commission that the Community 
and the three associated countries will have to make 
mutual concessions regarding agricultural products covered by EC market regimes. In agreeing on con­
cessions, account will have to be taken of the sensitivity 
of the products, the Common Agricultural Policy and 
the outcome of the GATT/Uruguay Round. In this 
connection, the European Commission must ensure that 
the difficult problems associated with the CAP are not 
aggravated. 
For many years now the Community has had to contend 
with structural surpluses in agricultural markets. These 
serious difficulties must not be exacerbated by the 
importation of particularly sensitive products from 
Eastern European countries. The common agricultural 
policy is currently in a state of upheaval and it would 
be irresponsible to jeopardize further CAP reforms. The 
Agricultural Council accordingly finds itself with the 
difficult task of having to incorporate in the European 
Agreements a politically reasonable compromise which 
is consistent both with CAP's long-term prospects and 
GATT regulations. Since these Agreements represent a 
realignment of East-West economic relations, such a 
compromise is likewise of fundamental importance. 
Seeking to solve problems by domestic price support, 
as in the association agreement with Cyprus, is hardly 
advisable. The three contracting partners are agricul­
tural producers on too large a scale for that. 
Now the US Congress has voted by a clear majority for 
a two-year extension of the negotiating brief for the 
GATT/Uruguay Round, the prospects for negotiating 
a satisfactory agreement in agriculture have improved 
considerably. However, the GATT negotiations are still 
a long way away from the original aim of exercising 
more discipline in the use of subsidies and other measur­
es directly or indirectly influencing the agricultural mar­
ket. After more than 40 years of GATT, traditional 
agricultural exporting countries are entitled to reliable 
international trade rules observed by all countries. Such 
rules would be expected to prevent any further 
upheavals in world agricultural markets and ensure fair 
access to markets for all countries. 
The Committee also recommends that a substantial 
proportion of agricultural surpluses produced in associ­
ated countries be exported to other neighbouring East­
ern European countries. The USSR and other former 
members of Comecon will need to import large quantit­
ies of agricultural products for the foreseeable future. 
The Community should make funds available so that 
agricultural products from Poland, Hungary and 
Czechoslovakia can be exported directly to these 
countries for hard currency. Such help should last sev­
eral years; it would at the same time constitute a positive 
31. 12. 91 Official Journal of the European Communities No C 339/57 
contribution to the economic development of Eastern 
Europe. The Committee also proposes—as it did in its 
Opinion on the Community and German unifi­
cation—that consultations be held with its Eastern 
European partners on a set-aside and extension pro­
gramme to stabilize agricultural production and 
improve the environment in rural areas. Such a pro­
gramme would also have to receive financial support 
from the Community within the limits of the funds 
available. 
4.13. To help create a free-trade area, the European 
Agreements contain a number of accompanying meas­
ures. These include standstill agreements, consultations 
in the case of dumping, safeguard agreements, pro­
visions on competition and state aid, public-sector 
enterprises, procedures for solving disputes and the 
effective protection of intellectual property. An 
additional protocol clarifies the rules of origin, which 
will be preferential in kind, whilst yet another protocol 
refers to specific transitional provisions contained in 
the Acts of Accession of Spain and Portugal. The Com­
mittee welcomes the measures since they will help in 
essence in the early identification and removal of sourc­
es of trade friction, particularly during the ten-year 
adjustment period. The frequent reference to the appro­
priate GATT rules is welcome and the Committee 
assumes that any advances in the current round of 
GATT negotiations will be automatically incorporated 
into the agreements. 
4.13.1. The Committee considers that the consul­
tation procedures applicable to all cases of dumping 
are particularly important. The Committee assumes 
that the GATT anti-dumping and subsidy codes will 
be fully observed. At the same time the associated 
countries should unequivocally state at a suitable point 
in the Agreements that they fully support the Com­
munity's tough line on subsidies. In the Community's 
textile and clothing sectors, for example, there is grow­
ing concern, reflected by more and more vociferous calls 
for price clauses offering protection against subsidies. It 
is not certain, when the 'normal value of goods' is fixed, 
whether the associated countries will be treated as 
countries without a market economy (as the former 
state-trading nations were) or whether they will be 
considered, from the time the Agreements come into 
force, as belonging to the group of countries with 
functioning market economies. The Committee feels 
that this issue needs to be clarified. 
4.13.2. The Committee finds the provisions on com­
petition and State aid convincing and approves them 
without reservation. All agreements and concerted 
practices which prevent, restrict or distort competition 
are to be prohibited. Any abuse of a dominant position 
is also prohibited. State aid which distorts or threatens 
to distort competition by favouring certain undertak­ings or the production of certain goods is likewise 
to be regarded as incompatible with the Agreements. 
Effective rules on competition are the sine qua non for 
a properly functioning market economy. Competition 
is a central pillar of the Common Market; without it 
there is no guarantee that the advantages of the Single 
Market can be advantageously exploited. The Com­
mittee agrees that, from the very start, the contracting 
partners of Eastern Europe should align their national 
competition laws as closely as possible on those of the 
European Community. 
4.13.3. Free-trade arrangements can only be enjoyed 
if there is concrete proof of the origin of products 
(proof of preference). The requirements to be met by 
the concept of 'origin' are laid down in an additional 
protocol. During the association negotiations the nego­
tiating partners of Eastern Europe have called for 
'multilateral cumulation' and insist that components of 
third-country origin (from the three Eastern European 
countries as well as EFTA States) should not affect the 
origin of the product. The Committee supports the 
desire of Eastern European countries to win acceptance 
for cumulative rules of origin but asks the European 
Commission to clarify whether the rules of origin of all 
countries taking part in 'cumulation' must be com­
pletely identical. The advantages of multilateral cumu­
lation are undisputed: they not only strengthen the 
agreement to establish closer cooperation reached by 
Czechoslovakia, Poland and Hungary in mid-February 
1991 but also make it easier for the Community's part­
ners in Eastern Europe and the EFTA countries to move 
closer together—a necessary condition for achieving 
pan-European integration. The Committee would also 
point out that the Commission has likewise endorsed 
cumulative rules of origin in the Lome Convention 
between the Community and the African, Caribbean 
and Pacific States (ACP), as well as in the agreement 
concluded with the Maghreb States. 
Free movement of persons, services and capital 
4.14. In addition to free movement of goods, the 
basic freedoms pursued by the European unification 
process are above all freedom of movement for workers, 
freedom of establishment, and freedom of movement 
for services and capital. As key factors in the creation 
of a 'real' single market, they have paramount economic 
importance and great symbolic value. The Committee 
welcomes the inclusion of such policies in the European 
Agreements, but warns that certain passages have been 
made too abstract in an attempt to achieve a compro­
mise. 
4.14.1. Free movement of persons concerns first and 
foremost the integration of workers legally employed, 
No C 339/58 Official Journal of the European Communities 31. 12. 91 
and their family members legally resident, in the Mem­
ber States. Over the first five-year period after the 
Agreements have come into force, every possibility for 
improving the situation of this group of people will 
have to be examined and fully utilized. Whilst the 
Committee unreservedly supports this proposal it 
would also welcome agreements covering workers from 
Poland, Czechoslovakia and Hungary who are 
employed illegally in the Community. According to 
reliable sources, the total has now reached six figures. 
The Economic and Social Committee, which has 
already discussed migration from third countries in a 
number of Opinions i1), calls for legally resident immi­
grants in the Community to be given their full place in 
the 'People's Europe'. Steps should be taken to ensure 
that Community rights and obligations affecting resi­
dence, employment and mobility also apply without 
restriction to this category. 
In its most recent Opinion on the legal status of immi­
grant workers from third countries (2) the Committee 
once again tackles the 'internal' aspects of a Community 
immigration policy, and calls upon the Member States 
and the EC Commission to bring about Community-
wide harmonization without significant delay of legal 
provisions, instruments and measures necessary for the 
social integration of immigrants. In addition, conditions 
should be laid down (at last) under which immigrants 
from third countries enjoy freedom of movement on an 
equal footing with Community citizens. Only in this 
way, in the Committee's view, can discrimination be 
removed, the operation of the single market supported 
and the aim of creating a unified Community labour 
market achieved. The dubious alternative would be 
national labour markets with legally and socially dif­
fering conditions for workers from third countries. 
In the second stage of the tansitional period the Associ­
ation Council intends to examine ways of facilitating 
the immigration of workers from the associated 
countries. A precondition for this is for the economic 
and social factors in the associated states to approxi­
mate those of the Community to a considerable extent. 
A further condition is the (future) employment situation 
in the Community. The Committee regrets the failure 
to make specific mention in the Agreement of the fact 
that the Community has limited scope for action, even 
in the medium term, with respect to freedom of move­
ment. The expectations aroused as a result (including 
political hopes) will probably lead to bitter disappoint­
ment after a few years. On the one hand, concessions 
in existing agreements (Turkey) (already) limit immi­
gration possibilities for workers seeking jobs, while, on 
(*) OJ No C 343, 24. 12. 1984; OJ No C 188, 29. 7. 1985. 
(2) OJ No C 159, 17. 6. 1991. the other hand, the evidence suggests that the Com­
munity labour market will have no significant need for 
additional labour from third countries in the foreseeable 
future. According to the most recent estimates, the 
Community's rate of unemployment is not likely to fall 
for some time. Job losses in the territory of the former 
GDR, which are not yet included in the Commission's 
data, make matters worse and are by no means at an 
end. This assessment is supported by the McKinsey 
Report drawn up for the German Federal Government, 
which states unequivocally that a reduction in the num­
ber employed in the territory of the former GDR from 
about 9,25 million (end of 1989) to about 5 million is 
to be expected, and is now a certainty, and that the 
radical switch from a mismanaged economy to a func­
tioning market economy is making deeper wounds than 
any previously known structural change within an econ­
omic system. 
Against the background of the empirical labour market 
figures in the Community, and taking account of the 
redundancies brought about by reform in the neigh­
bouring Eastern states, help from Western countries 
must be comprehensive and its individual elements must 
be rationally coordinated. Not only financial and tech­
nical aid is required but also continuing promotion of 
the necessary training of workers. This must be regard­
ed as an investment in the future, and must take account 
of the new, more stringent, requirements arising over 
a broad area from technical change. The Committee 
supports in this context the specific proposals made in 
mid-May of this year by the Economic and Social Sub-
Committee of the EFTA Consultative Committee (3): 
— transfer of know-how needed for the establishment 
of suitable worker/employer relations and prin­
ciples, 
— organization of training programmes for Eastern 
European managers and trade unionists, 
— examination of possibilities for temporary employ­
ment of workers from Eastern European states (e.g. 
under training contracts), 
— bilateral agreements (lasting from 12 to 18 months) 
designed to give workers additional specialized 
knowledge (4), 
(3) EFTA/CSC/ES 1/91 of 13 May 1991. 
(4) Agreements of this kind already exist between the Federal 
Republic of Germany and Hungary since December 1989, 
and the FRG and Poland since June 1990. 
31. 12. 91 Official Journal of the European Communities No C 339/59 
— agreement on work and service contracts with East­
ern European companies (*), 
— closer co-operation between national labour market 
authorities. 
At the same time, the Committee would draw attention 
to sectoral initiatives which, in its view, offer oppor­
tunities that have been little used to date. The most 
striking example is provided by the Community steel 
industry, which is seeking to intensify the necessary 
transfer of know-how from West to East with a broad 
range of proposals. First, it would like to involve East­
ern European experts in national and international 
Community organizations where notes are compared 
on industrial questions. (Concretely, this means inviting 
them to participate in the work of the technical com­
mittees and the bodies responsible for transport, energy, 
the environment and similar issues.) In addition, West­
ern steel works could train both managers and the 
workforce in the associated countries and send special­
ists to advise directly on the reorganization of ageing 
plant. 
The Committee recommends that the numerous pro­
posals be examined in detail and—if this can be done 
quickly—annexed to the European Agreements. At the 
same time, the Commission should follow the lead of 
the Community steel industry and give greater encour­
agement to similar broad-based activities in other econ­
omic sectors. 
4.14.2. As regards the right of establishment, the 
Member States would like businesses and nationals in 
the associated states to be subject to the same legal 
framework as their own enterprises and citizens as 
soon as the European Agreements enter into force. The 
Eastern contracting parties will make this adjustment 
in the course of the ten-year transitional period. The 
associated states will be able to make exceptional 
arrangements in individual sectors in order to deal with 
the constraints of structural adjustment or other serious 
difficulties (including social problems). These measures 
must be of limited duration (maximum three years) and 
terminate not more than two years after the end of the 
transitional period. Protective measures will also be 
possible in cases where businesses or sectors in the East 
are forced to accept a 'dramatic' loss of their domestic 
market shares. 
The Committee broadly endorses these Arrangements. 
Freedom of establishment will facilitate the transition 
to a market system and help to create a modern, com­
petitive economy in the associated states. The Com­
mittee also appreciates the need for temporary protec­
tive measures in certain exceptional situations. At the 
same time, 'dramatic' reductions in the domestic market 
(*) At present 35 000 workers from East European states are 
employed in the FRG under such special contracts. shares of our Eastern partners can hardly justify protec­
tionism. The Committee thinks that this passage should 
be carefully reconsidered and more clearly worded—in 
particular the 'relevant' market variables should be 
clearly defined. 
4.14.3. The Committee approves the (gradual and 
mutual) liberalization of cross-frontier services. In view 
of the increasing worldwide significance of services 
markets, the importance of liberalization in this area 
cannot be overestimated. The Association Council will 
examine individual measures and take appropriate 
action to promote the process. Special provisions apply 
to cross-frontier transport services. All administrative, 
technical and other barriers to international maritime 
traffic, which restrict or could discriminate against the 
provision of services, will be removed. Agreements on 
air and land-based traffic will be concluded in the light 
of the Community's common transport policy, with 
traffic development being coordinated. During the tran­
sitional phase of the European Agreements, the associ­
ated states intend to bring their legislation into line 
with Community rules, at least insofar as they facilitate 
mutual access to transport markets and promote pass­
enger and goods traffic. 
The Committee would both stress and applaud the joint 
desire of the contracting parties to seek a satisfactory 
result to the Uruguay Round of GATT negociations, 
which aims to establish a multilateral framework of 
principles and rules governing service transactions, and 
to incorporate this framework in the European Agree­
ments at the appropriate juncture. 
The Committee also expects the Association Council 
to monitor closely the economic and social effects of 
liberalization measures on Community frontier regions 
and to prevent social dumping. It would be disastrous 
if the already difficult recovery process in the former 
GDR (particularly in the peripheral areas) were to 
be further impeded and delayed by social dumping 
practices. 
4.14.4. The advantages of a liberalized goods and 
services sector from the standpoint of location and 
specialization can be fully exploited only if the free 
movement of cross-frontier capital is guaranteed. The 
free movement of capital will create favourable con­
ditions for monetary co-operation and reinforce stabili­
zation efforts in the associated countries. The Com­
mittee supports all agreements which are designed to 
increase the free movement of capital between the Com­
munity and its partners in Eastern Europe. It particu­
larly welcomes the fact that the contracting parties have 
untertaken to guarantee freedom of payments for goods 
No C 339/60 Official Journal of the European Communities 31. 12. 91 
transactions (though apparently not for services) from 
the entry into force of the Agreements. Investment 
capital by Community investors will also be liberalized. 
In addition, the conditions for the gradual application 
of Community provisions on free capital movements 
will be created in the first five-year period of the Euro­
pean Agreements. In the second part of the ten-year 
transitional period, the Association Council will exam­
ine ways of taking over all the relevant Community 
provisions. The Committee regrets that the contracting 
parties have not yet agreed on a timetable for these 
liberalization measures which would clearly indicate 
when various categories of financial transaction are to 
be integrated into a 'fully liberalized system'. 
Approximation of legal provisions 
4.15. The approximation of existing legal provisions 
to Community law represents an important precon­
dition for the economic and social integration of the 
associated states into the Community. In the context 
of cross-frontier cooperation, Community enterprises 
—and those of its Eastern neighbours—are confronted 
by three different legal systems. These are national laws, 
Community laws, which are also becoming increasingly 
important for our Eastern European partners, and the 
legislation of the country for which the exports or 
investments are intended. The same situations are fre­
quently evaluated differently and regulated in a contra­
dictory fashion. The main losers in this connection are 
small and medium-sized enterprises, which often cannot 
afford to employ highly qualified legal experts. Thus, 
the earlier the legal framework of the associated states 
is brought into line with the Community's, the more 
favourable will be the 'environment' for East/West 
business cooperation and the greater the prospects for 
an intensification of cross-frontier traffic in goods, ser­
vices and capital. 
Legislative harmonization clearly represents an 
immense task, involving a great variety of provisions 
which can be adjusted only gradually and covering such 
fields as customs law, social legislation, accountancy 
and corporate taxation, workers' safety, financial ser­
vices, competition, consumer and environmental pro­
tection, indirect taxes, technical requirements and stan­
dards, transport, industrial property rights and copy­
right. The associated states have initiated the necessary 
harmonization measures but the Committee regrets the 
failure of the draft Agreements to fix priorities. Thus 
on ecological and competition grounds, the Committee 
regards it as urgent for the associated states to transpose 
Community legislation on the environment, compe­
tition and subsidies. Similarly, the safety provisions of 
the Treaty of the European Atomic Energy Community 
(EAEC) should be adopted without delay. Action is also imperative in connection with worker protection 
at the workplace and certain consumer-protection 
directives (e.g. on product liability). 
The lack of a time schedule for legislative harmoniza­
tion is regrettable. As in other policy areas, the Com­
mittee would have liked the concept of a two-stage 
transitional period to have been included in those parts 
of the Agreements dealing with legislative approxi­
mation. Now that the preambles to the European 
Agreements expressly mention the desire of the associ­
ated parties to become full members of the European 
Community at the appropriate time, our Eastern Euro­
pean neighbours have an obvious interest in selectively 
transposing the Community's legal framework to their 
national context. The Community's undertaking to 
provide technical assistance should greatly facilitate the 
solution of the problem. 
Economic co-operation 
4.16. The European Community and associated 
states are proposing to intensify their economic co­
operation and go far beyond the limits already fixed by 
the trade and co-operation agreements. These joint 
activities are to underpin the process of economic and 
social transformation and development in the associ­
ated Eastern countries and facilitate their assimilation 
into the international production system. In addition 
to industrial co-operation and the promotion and pro­
tection of investment, this action will cover industrial 
standards, scientific and technical co-operation, edu­
cation and training, the agricultural and food industries, 
energy, the environment, transport, telecommuni­
cations, financial services, regional development, social 
co-operation, tourism, small and medium-sized 
enterprises, customs, statistics, economics and addictive 
substances. All these areas of co-operation are subdiv­
ided into specific fields of action (approximately 150). 
Attention should be drawn to the express assurance of 
the contracting parties to take account of the environ­
mental impact of economic measures from the outset. 
In the Committee's opinion, the environment is a pan-
European issue which must be fully integrated with 
other policy areas. To this end, it must not be guided 
by the lowest common denominator but must provide 
for the implementation of all necessary ecological and 
economic measures. Consequently, both sides must 
agree to monitor such measures jointly. 
The variety of the chosen fields of action is extremely 
impressive and deserves in principle to be endorsed. At 
the same time, the Committee feels justified in 
31. 12. 91 Official Journal of the European Communities No C 339/61 
questioning whether common projects can be executed 
in all these areas in the nineties—even on the basis of 
co-operation with Community undertakings. Neither 
the manpower nor the financial resources of the Com­
munity bodies seem sufficient to ensure satisfactory 
implementation of the whole range of activities during 
the transitional phase of the European Agreements. Nor 
should it be forgotten that these measures apply to 
three partner countries which, in the Commission's 
view, will be joined by other neighbouring states in the 
present decade. The Committee feels that it would have 
been more appropriate to draw up an initial (rigorous) 
action plan—taking due account of all secondary con­
straints—which could provide a framework for the 
definition of specific objectives (to be achieved in 
accordance with a fixed timetable). Only objectives 
which, in the opinion of the contracting parties, call 
for urgent action should be chosen. In this connection, 
the Committee is less concerned with fundamental dis­
cussions involving Community bodies or businesses 
and economic and social interest groups than with the 
precise definition of 'financial' priorities (schemes with 
a cross-border impact) which must be initiated by the 
Community and its Eastern neighbours or by undertak­
ings in the Member States. Here, the Committee is 
essentially thinking of such policy areas as infrastruc­
ture, nuclear power, education and training. 
In the field of basic public infrastructure, the Committee 
believes that the establishment and extension of an 
efficient infrastructure constitutes an important precon­
dition for successful structural reorganization in East­
ern Europe. This will require an investment policy 
capable of meeting higher quality requirements and the 
demands of a competitive, market-oriented economy. 
Such an approach implies that infrastructural invest­
ment in Eastern Europe should already be considered 
and evaluated in a European-wide context. It would 
foreshadow and flesh out the means to be adopted in 
order to achieve common, pan-European infrastruc­
tural planning. Against this background, the Economic 
and Social Committee has welcomed the Commission 
proposal to establish trans-European networks—par­
ticularly in the fields of transport, telecommunications, 
energy and training (!). In its earlier Opinion, the Com­
mittee calls for an overall, integrated and multi-modal 
approach which would make it possible to demarcate 
the reference framework, reduce investment risks, 
increase the efficiency of Community, national and 
regional action and take account of long-term require­
ments^). 
The Committee regards increased power plant safety 
in Central and Eastern Europe as a second major objec-
(*) Towards Trans-European Networks - For a Community 
Action Programme [doc. COM(90) 585 final]. 
(2) Doc. ESC 805/91. tive for economic co-operation. The challenge created 
by Chernobyl of guaranteeing comparable, optimum 
nuclear safety standards in both East and West, has 
still not been taken up. Although the agreements on 
greater exchange of information and mutual assistance 
in the event of accidents represent initial success for the 
International Atomic Energy Agency (IAEA), there are 
still no binding international agreements on minimum 
safety standards. 
The Committee would urge the Community to sup­
plement the assistance programmes of the IAEA and 
the World Association of Nuclear Operators (WANO) 
by providing rapid and 'unconventional' aid towards 
the technological improvement of power plants in oper­
ation in Central and Eastern Europe. The Committee 
sees the Commission's recent decision to provide fund­
ing for such action under the Phare programme as a 
first (welcome) step in this direction. Although the 
former Comecon countries adopted a refurbishment 
programme for old VVER-440 MWel pressurized water 
reactors in 1989, little was done to implement it. In 
addition to the lack of funds, the project was hampered 
by the urgent need to operate the plants in the absence 
of reserve capacity. Nuclear reactors supply almost 
50% of Hungary's electricity and a good quarter of 
Czechoslovakia's. Given this situation, the importance 
of the Commission's proposed 'European Energy Char­
ter', initiated by the Dutch Prime Minister, Mr Lubbers, 
can hardly be overestimated (3). The Economic and 
Social Committee has stressed the extraordinary politi­
cal scope of this Charter (4) which, in the Commission's 
opinion, will give the countries of Central and Eastern 
Europe 'the assistance they need for economic recovery 
and for obtaining energy supplies under conditions 
allowing a cleaner environment, a better balance 
between different energy sources and more efficient use 
of energy'. 
The third priority for joint action by the contracting 
parties should lie in the field of education and training; 
workers' training will play a key role in the economic 
reform process. Notwithstanding the fact that workers 
in the Eastern associated countries have received a 
thorough basic education and generally also possess 
very good job qualifications, the skills appropriate to 
a (former) socialist economy are quite different from 
those required in a competitive market economy—as 
experience in the new Federal Lander confirms. The 
principal shortcoming is the lack—at least on the 
(3) Commission Communication on a Community Energy Char­
ter [doc. COM(91) 36 final]. 
(4) OJ No C 269, 14. 10. 1991. 
No C 339/62 Official Journal of the European Communities 31. 12. 91 
necessary scale—of knowledge and experience with 
regard to the operation of market-orientated systems, 
a problem which also applies to the use of modern 
production, information and communications tech­
niques. There are also shortcomings of a non-technical 
nature, since independence, initiative and creativity are 
not called for in a centrally-planned economy. The 
ability to act independently and in one's own economic 
interests in a constantly changing market environment 
has first to be learnt through experience. 
There is an urgent need for retraining and further 
training at all levels. Whilst the proposals already con­
tained in the European Agreements are to be welcomed, 
they are not sufficient. A comprehensive campaign to 
improve qualifications is called for. The Committee 
therefore also urges the Member States to take steps to 
assist and accelerate the efforts of their Eastern partners 
to close the qualifications gap. Similarly, Community 
businesses, acting in conjunction with their (national/ 
European) associations should make specific manage­
ment information and technical know-how available to 
employers and workers in their sector in the associated 
countries of Eastern Europe. The example of the Com­
munity steel industry—to which the Committee has 
referred elsewhere—should be noted by other sectors. 
Financial co-operation 
4.17. The challenge of structural adjustment in the 
neighbouring Eastern European states and the task of 
creating an internationally competitive economy cannot 
be successfully confronted without effective Western 
aid. All the countries of Central and Eastern Europe 
require funds in hard currency; their need for financial 
support has grown steadily since the beginning of the 
economic reform movement. Between 1986 and 1990 
the foreign indebtedness of the three Eastern neighbours 
rose from US dollar 57 000 million (1986) to US dollar 
77 000 million (1990). The OECD estimates that in 1990 
debt servicing amounted to a good 70% of export 
earnings in Poland, 65% in Hungary and 25% in 
Czechoslovakia. In the meantime several reputable 
institutions have attempted to calculate, with the help of 
mathematical models, the likely medium-term financial 
requirements of the countries of Eastern Europe in 
order to restructure their economies. The projections 
nevertheless vary enormously. Depending on the par­
ticular methodological approach adopted, the results 
vary for Hungary, Poland, Czechoslovakia, Romania, 
Bulgaria and Yugoslavia, taken as a group of six, from 
US dollar 14 000 million to over US dollar 420 000 
million. 
The draft agreements indicate that the Phare Pro­
gramme is to be continued until the end of 1992 in the 
context of financial co-operation. Thereafter, grants and Community loans from the European Investment 
Bank (EIB) are to be provided—on a multi-year 
basis—under Phare or a new financing mechanism. At 
the request of its associated partners, the Community 
will examine how, in the context of financial co-oper­
ation, the transition to currency convertibility can be 
facilitated and safeguarded. 
The Committee endorses the EC's approach and 
agrees that Community aid can be reasonably contem­
plated only on the basis of a multi-annual plan 
extending over a number of years. Initially, at least, 
this period should not last more than three to five 
years and should form an integral part of the first 
stage of the transitional period provided for by the 
European Agreements. Whilst there are (officially) 
still no proposals with regard to overall funding, the 
Committee assumes that the basic amounts will largely 
be determined by existing and future Community 
financial resources; the ability of the associated 
countries to repay EIB loans on time is equally 
important. The final Community funding would there­
fore have to be approved in the light of the absorption 
capacity of the East and in the light of the new 
agreement on budgetary discipline which is to replace 
the current inter-institutional arrangement. 
The Council's negotiating brief of December 1990 for 
the Association Agreements indicates that experience 
gained under the Phare programme will be used to 
determine the most pressing needs and absorption 
capacity of the contracting States. The Committee 
does not agree with this approach without reser­
vations; it would rather reiterate its urgent call for a 
clear definition of priorities—in conjunction with the 
partners to the agreement—in the broad context of 
economic co-operation. These priorities can then 
provide a point of reference for the preparation of 
the multi-year financial framework and the spreading 
of expenditure over individual years in order to ensure 
optimum attainment of the goals. 
The Committee fully endorses the coordination of 
Community funding (including bilateral assistance) 
with financial aid provided by other OECD countries 
or international finance institutions [International 
Monetary Fund (IMF), World Bank and the European 
Bank for Reconstruction and Development]. In this 
context, it also proposes the creation of a Community 
task force to monitor all aid provided and the use to 
which this is put on an on-going basis, to correlate 
funding and spending in the Association Committee, 
31. 12. 91 Official Journal of the European Communities No C 339/63 
and to monitor how efficiently resources are used in Association Council should be regularly informed of 
conjunction with the Eastern European parties. The the results of these activities. 
Done at Brussels, 26 September 1991. 
The Chairman 
of the Economic and Social Committee 
Francois STAEDELIN 
APPENDIX 
Recent developments in relations between the Community and the countries of Central and Eastern Europe 
June 1988: Community and a Comecon delegation sign the Joint Declaration on mutual recognition in 
Luxembourg. 
September 1988: EC-Hungary co-operation agreement signed. 
December 1988: Trade agreement concluded with Czechoslovakia. 
July 1989: EC asked coordinate Western aid to Poland and Hungary by the Paris G-7 Summit. 'Group of 24' 
created. 
September 1989: EC-Poland trade and co-operation agreement signed. 
November 1989: EC Heads of Government discuss aid to Eastern Europe at a special summit in Paris. On 
the eve of the meeting, EC foreign ministers agree on a joint strategy to facilitate advanced technology 
transfer to Eastern Europe. 
December 1989: EC Summit in Strasbourg agrees to set up the European Bank for Reconstruction and 
Development to provide credit for Eastern Europe. The EBRD was established by 42 countries on 25 May 
1990 in Paris. With headquarters in London, it began operating on 15 April 1991. 
December 1989: Group of 24 meets in Brussels to adopt an aid programme for Poland and Hungary and 
announce its willingness to help other Eastern European countries 'once the necessary political and economic 
reforms' have been initiated. 
December 1989: EC-USSR trade and economic co-operation agreement signed. 
April 1990: Special EC Summit agrees on measures for the integration of the former GDR into the Community. 
Senior Community representatives also decide to offer individual Eastern European countries a new form of 
association agreement. 
May 1990: GDR and Bulgaria sign trade agreement with Community. Limited 1988 agreement with Czechoslo­
vakia updated. 
May 1990: Group of 24 agrees to extend Phare programme to other Central and Eastern European countries. 
July 1990: GDR enters into monetary, economic and social union with the Federal Republic and thus becomes 
a de facto member of the EC Customs Union. 
October 1990: GDR-FRG State Treaty enters into force, uniting the two parts of Germany in the Federal 
Republic and making the territory of the former GDR part of the European Community. 
October 1990: EC-Romania trade and co-operation agreement signed. 
No C 339/64 Official Journal of the European Communities 31. 12. 91 
November 1990: European Parliament adopts package of measures covering integration of the five new 
Federal Lander into the Community. 
December 1990: EC Council approves the Community measures. 
December 1990: Rome European Council approves food aid worth ECU 750 million to USSR. Aid to other 
Central and Eastern European countries increased. 
December 1990: EC Council authorizes the Commission to initiate association negotiations with Poland, 
Hungary and Czechoslovakia. The negotiations begin in February 1991. 
January 1991: Commission announces that Romania now qualifies for aid under the Group of 24 support 
programme for reformist Eastern European states. 
March 1991: Commission adopts the joint support plan for the new Federal Lander, which will receive 
Community aid totalling DM 6 000 million in the 1991-1993 period. 
June 1991: Council for Mutual Economic Aid (Comecon) disbanded. 
August 1991: Failed putsch in the Soviet Union followed by an acceleration in the process of transforming 
the USSR into a Federation of Democratic States. 
Opinion on the economic situation in the Community in mid-1991 
(91/C 339/13) 
On 26 February 1991 the Economic and Social Committee, acting under the fourth paragraph 
of Article 20 of its Rules of Procedure, decided to draw up an Opinion on the economic 
situation in the Community in mid-1991. 
The Section for Economic, Financial and Monetary Questions, which was responsible for 
preparing the Committee's work on the subject, adopted its Opinion on 10 September 1991. 
The Rapporteur was Mr B.N.J. Pompen. 
At its 289th plenary session (meeting of 26 September 1991), the Economic and Social 
Committee adopted the following Opinion by a majority vote in favour and six votes against, 
with 15 abstentions. 
1. Introduction 
1.1. General trends 
Using a number of indicators, this section provides an 
account of economic developments over the six-year 
period from 1989 to 1994 (see Table 1) (2). The projec-
(*) Because of serious statistical problems the economic data for 
the EC and Germany do not include the former GDR. tions for 1991 and 1992 are the European Commission's, 
while figures from the Netherlands Central Economic 
Planning Office (Nederlands Centraal Planbureau) have 
been taken for 1993/1994 in order to broaden the basis 
of the policy assessment. Naturally, these projections 
are fraught with major uncertainties, some of which 
are discussed in 1.4.