Opinion of the Economic and Social Committee on 'Relations between the European Union and the countries bordering the Baltic Sea` (98/C 73/17)

The Economic and Social Committee's information report on relations between the European Union and the countries bordering the Baltic Sea was adopted unanimously by the Section for External Relations, Trade and Development Policy in January 1997. At its March 1997 plenary session, the Committee decided unanimously to forward the report to the Council of Ministers and the Commission.

At its plenary session on 10 July 1997, the Economic and Social Committee, acting under Rule 23(3) of its Rules of Procedure, decided to draw up an opinion on 'Relations between the European Union and the countries bordering on the Baltic Sea`.

The opinion is based largely on the contents of the above report.

The Economic and Social Committee has already adopted several opinions on relations between the EU and the countries of the Baltic Sea region. These are listed in Appendix I and are taken into account in the information report and this opinion without being referred to directly.

The Section for External Relations, Trade and Development Policy, which was responsible for preparing the Committee's work on the subject, adopted its opinion unanimously on 25 November 1997. The rapporteur was Mr Hamro-Drotz.

At its 350th plenary session (meeting of 10 December 1997) the Economic and Social Committee adopted the following opinion by 119 votes in favour, with six abstentions.

1. Background and current situation

1.1. There are nine Baltic Rim countries: Germany, Denmark, Sweden, Finland, Russia, Poland, Lithuania, Latvia and Estonia. Certain other countries are often included in the Baltic Sea cooperation area, e.g. Norway.

The Baltic Sea has had an enormous influence on the history of Europe. It is a vital route in northern Europe and has through the ages acted as a link between the countries and peoples of the Baltic Rim.

1.2. In recent years, the situation in the Baltic Sea region has changed drastically, following normalization of east-west relations. The changes are underpinned by the following factors, in particular: the enlargement of the European Union, involving the accession of Sweden and Finland in 1995, the reunification of Germany in the early 1990s, the newly regained independence of the Baltic States (Estonia, Latvia, Lithuania), Poland's improved economic and political situation, the conclusion of a partnership and cooperation agreement between the EU and Russia.

1.3. The Baltic Sea, including the Gulf of Bothnia and the Gulf of Finland, is gradually becoming an inland sea for the EU and is increasingly surrounded by the EU's single market. A new age has dawned, in which people's independence is respected. This new situation is based on trust and peaceful co-existence between neighbouring countries in the region.

The countries of the Baltic Sea region are blessed with natural resources, production facilities and human resources. Closer cooperation between the countries in the area is making it possible to exploit these resources.

1.4. In recent years, trade between the countries bordering the Baltic Sea has increased by nearly 20 % per year (). The internationalization of companies operating in the economies in transition in the region is still in its infancy, and, according to the above-mentioned ETLA study, the greatest obstacles to economic cooperation between these countries are to be found in legislation and its implementation, scant acceptance of foreign firms, high investment costs, problems in goods transport and crime. High inflation, the continuing high levels of collective ownership, privatization arrangements and shortcomings in the public decision-making process also reduce economic cooperation opportunities. Growth in foreign trade between the countries of the Baltic Sea Region, the increase in direct corporate investment and incipient production cooperation are, however, signs that the outlook for economic growth is improving ().

1.5. The Baltic Sea is affected by a number of unfavourable conditions and continuous pressure from pollution and man's over-exploitation of nature. The EU and the Baltic Sea states have, on several occasions, noted that common initiatives to fight pollution must be strengthened and that the measures adopted so far have been unsatisfactory. The Baltic Marine Environment Protection Commission (HELCOM) has been operative since 1974. All the countries in the surrounding area are members of the commission, as is the EU.

1.6. The recent political changes in central and eastern European countries mean that development is needed in several policy areas: in administration, infrastructure, and in the extent to which the countries are ready for cooperation and integration. The EU's contribution towards development in the countries of the Baltic Sea region, Poland and Russia comes mostly from the Tacis, Phare and Interreg programmes. Economic support is also provided by institutions such as the European Investment Bank (EIB), the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), the European Bank for Reconstruction and Development (EBRD), the Nordic Investment Bank (NIB) and the Nordic Council. A considerable input of bilateral aid is also provided by individual countries, particularly the EU Member States around the Baltic. During 1990 to 1994, aid to the Baltic Sea region amounted to some ECU 4,5 billion (about 15 % from the EU, 45 % from national aid and 40 % from international bodies), and for 1995-1999 is expected to rise to approximately ECU 4,7 billion (about 20 % from the EU, 45 % in national aid and 35 % from international bodies) ().

1.7. The Baltic Sea States' international relations and relations with the EU have been enshrined in several agreements. Relations have undergone huge changes in recent years, and will probably be strengthened and developed further in the future. The most important agreements are shown in the table in Appendix II.

1.8. The coastal states in the area can be divided into three groups:

1) EU Member States (Germany, Denmark, Finland and Sweden);

2) countries which have signed Europe (association) agreements (Poland, Lithuania, Latvia, Estonia);

3) one country which has signed a partnership and cooperation agreement with the EU (Russia).

1.9. The European Union has established guidelines for its Baltic Sea Region strategy. In Autumn 1994, the European Commission set about preparing the guidelines for the EU's Baltic Sea policy. The Commission's Baltic Sea initiative was adopted, and the conclusions of the European Council meeting in Florence in June 1996 stated that: 'the European Council reiterates the importance of the effective implementation of the Union's strategy towards the Baltic Sea region, among other things in relation to the need to further develop the Union's relations with Russia.` ()

1.10. There are many cooperation forums operating in the Baltic Sea region. There is a myriad of local and sectoral cooperation initiatives. The trade union organizations, for instance, are working on a coordinated initiative within the framework of the Sodicoba project. The Council of the Baltic Sea States (CBSS) was established in 1992 to provide a forum for national governments. Apart from the coastal states, Norway and Iceland are also members, as is the EU via the European Commission.

1.11. The Heads of Government of the CBSS member states met EU leaders at a summit meeting in Visby in May 1996. The aim was to consolidate the Baltic Sea region as a dynamic, democratic and stable part of the new Europe. The summit approved a declaration, containing inter alia the following statement: 'The heads of government discussed various measures in the three areas of increased people-to-people cooperation and civic security, economic development and integration and strengthened environmental protection which could be implemented through action programmes to be further elaborated by the CBSS.` () The CBSS Ministerial session held in Kalmar, July 1996, endorsed the implementation of the action programmes, in accordance with the summit recommendations ().

1.12. Since the ESC's information report was published, important events have taken place in the Baltic Sea region and in Baltic Sea cooperation:

1) In July 1997, the European Commission published Agenda 2000 (), which addresses the EU's enlargement strategy, funding for enlargement, etc. At the same time, the Commission published its reports on the applicant countries, including the Baltic Sea states of Estonia (), Latvia (), Lithuania () and Poland ().

Following on from these reports, the Commission recommends that accession negotiations with the Baltic Sea countries should first start with Poland and Estonia. Negotiations with the other Baltic Sea applicant countries should start when they are better prepared for membership. A Europe-Conference is being planned to enable all European countries to discuss integration.

The aim is for a decision to be taken at the Luxembourg Summit in December 1997 on the choice of candidates and starting dates for the negotiations and other relevant measures on the basis of the conclusions of the European Council in Copenhagen in 1993 and the Commission reports.

2) In June 1997, the European Parliament adopted its report on the Commission's Baltic Sea Region Initiative ().

The report emphatically endorses increased cooperation in the region. The European Parliament recommends that cooperation between Baltic Sea region MPs should be launched. The EP also calls on the Commission to present a report this year on how cooperation is proceeding and the kinds of resources it is likely to require.

3) In May 1997, the Commission presented a Communication on cross-border cooperation within the framework of the Tacis programme ().

The Commission adduces the growing importance of the Baltic Sea region within an enlarged European Union as one of the reasons for the need for cross-border cooperation. The new instrument encourages neighbouring regions to cooperate more on cross-border projects, e.g. expanding infrastructure. A number of Tacis-funded projects are up-and-running.

4) The CBSS's working group for economic cooperation (WGEC) submitted a report on its work to the CBSS's Ministerial Session in July 1997 (). The conclusions of the CBSS Ministerial Session in Kalmar, July 1996, show that the countries had tackled the following areas in particular: cross-border customs formalities, transport and communications, energy, small and medium-sized enterprises, the financial sector, legislation, land reform and spatial planning, trade agreements and support measures.

The consensus is that most of the above views are being addressed in, inter alia, the EU's pre-accession strategy and in cooperation with Russia, and that many of the issues are being taken up by other cooperation bodies: it is therefore important to coordinate Baltic Sea cooperation with these efforts. Emphasis is placed in particular on the importance of national decisions and executive measures in accordance with the report's guidelines.

5) The CBSS held its Sixth Ministerial Session in Riga in July 1997. The Communiqué () notes with satisfaction that progress had been made in cooperation in a number of areas in the previous year, following on from the Commission's Baltic Sea initiative, and in the action programme approved at the CBSS Ministerial Session in July 1996. The Ministerial Session called on the Baltic Sea countries to continue their efforts in these cooperation areas and to set up a permanent secretariat for improved administration. Denmark has the presidency of the CBSS for the coming year until the next Ministerial Session in Denmark in 1998. The next summit of the Heads of State and Government of the Baltic Sea states is being planned for early 1998.

6) The floods in Poland, Germany and the Czech Republic in the summer of 1997 have caused a much greater influx of dirty water into the Baltic Sea and this is polluting the Baltic and surrounding areas considerably. The increasing eutrophication of the Baltic has, inter alia, led to a considerable increase in the amount of poisonous blue algae. These have spread to such an extent that an increasing area of the Baltic Sea is more or less out of bounds for leisure activities during the warm summer months.

2. Recommendations

2.1. Following on from the conclusions contained in the ESC's information report and recent developments in the area, the ESC notes that:

- major changes are taking place in the non-EU Baltic Sea countries, and in relations between the countries in the region; these changes are helping to strengthen the importance of the Baltic as a region, with potential benefits for Europe as a whole;

- the Baltic Sea region is a growth area with a range of economic strengths and production potential; it also serves as a route for transit traffic flowing in many directions, which can also benefit Europe as a whole;

- there are large discrepancies in the levels of prosperity of the Baltic Sea countries - particularly between EU countries and third countries - and there are still many elements of uncertainty which are an obstacle to cooperation in the region.

2.2. In the light of the above, the Committee would make the following recommendations:

1) The ESC emphasizes that the EU and its Member States can increase stability in the area by providing support for the reforms in the economies in transition in the region, in accordance with the principles of a market economy and a society based on citizens' rights and the rule of law. The Committee sees cooperation between the EU and the coastal states of the Baltic Sea as an important multilateral means of preventing political conflict and as a way of boosting economic development, security, peace and prosperity in Northern Europe. Cooperation should not merely enhance relations between the EU and the Baltic Sea states; it should also encourage the non-EU countries of the region to cooperate more closely amongst themselves. Since the Baltic is the only region where the EU and Russia share a border, Baltic Sea cooperation should also be a means of strengthening cooperation between the two. The ESC would therefore emphasize the importance of good, multilateral cooperation in the region and believes the EU should actively encourage and develop cooperation efforts. All the countries of the region must be wholeheartedly committed if the cooperation is to bear fruit.

2) The ESC feels that Baltic Sea cooperation does not require any new multilateral agreements, but rather that existing agreements and enlargement efforts, in accordance with, inter alia, the guidelines contained in the Commission's Agenda 2000 proposal, can be used as a blueprint for the development of cooperation. The EU Member States which have still not ratified the EU-Baltic Sea States Agreement of June 1995 should do so without delay. It is also in the EU's interest that the partnership and cooperation agreement (PCA) with Russia should enter into force. The challenge for the coming years will be to reap the largest possible benefits from existing agreements and to pursue purposefully the opportunities the agreements offer. The Baltic Sea needs a valid, clear and well-structured and coordinated strategy. Baltic Sea cooperation provides a natural basis for a Northern dimension to the EU's activities. This could be linked to, inter alia, the activities of the Euro-Arctic Council of the Barents (established in 1993), the cooperation of the Nordic countries and closer cooperation with the non-EU countries of the neighbouring region. The EU should work actively to develop its strategy in this regard.

3) The ESC feels that accession negotiations between the EU and the applicant Baltic Sea states should, preferably, all begin at the same time, as should the negotiations with the other central European applicant countries. Should this not be the case, then it is of the greatest importance that extra support be provided for those countries which are unable to launch negotiations, so that they can improve their position as soon as possible. The ESC feels that the Commission's enlargement strategy in Agenda 2000, particularly concerning pre-accession partnership, is necessary for this. The ESC hopes that the position of individual applicant countries as regards the launch of accession negotiations will be monitored on an annual basis and that the Committee will be afforded an opportunity to take part in the monitoring process.

4) The ESC feels it important that Baltic Sea cooperation should be linked to the EU's main policy areas, inter alia, concerning enlargement and partnership objectives (cf. Agenda 2000), infrastructures for transport and communications, energy, the environment, education and employment, social dialogue, structural and regional support, and the functioning of the single market as regards the applicant countries.

In particular EU strategy should aim to develop working cooperation, underpinned by the most concrete action plan possible in questions of common interest. The ESC feels that cooperation should be built on four pillars: economic growth and social development; democracy and security; people-to-people cooperation; and environmental protection. The Committee endorses the activities which have thus far been carried out within the framework of the CBSS and which are underpinned by the action programmes adopted at the Ministerial Session of July 1996, and by other Baltic Sea cooperation forums, and would encourage these bodies to continue their efforts.

5) In the economic field, the ESC feels that measures are required in the following areas: an improved climate for company operation and cooperation, improvement and adjustment to the energy network and the transport networks for goods, people and information, simplification of border formalities, reduction in criminal business activities, harmonization of rules governing trade, marketing, investment and competition, promotion of investment guarantees and smoothly functioning financial systems. Non-EU countries need help in modernizing their economic legislation and their institutions, including customs administration, and in corporate marketing and exports, goods distribution and logistics. Transit trade and membership of non-EU Baltic Sea states in the WTO should be encouraged. Special attention should also be paid to agriculture and trade in food products.

6) The ESC would emphasize that cooperation in the Baltic Sea region should also consist of cultural and social objectives of common interest. These include employment, the treatment of ethnic minorities and fundamental rights, such as equality in the workplace and social security, in the economies in transition.

The single market is closely tied up with social aspects. Consequently, enlargement should not be confined to merely introducing an area of free movement; rather, enlargement and other cooperation efforts should be moulded along the lines of the European model, in which there is also an attempt to reduce social tension, unemployment and injustice in the workplace.

7) The ESC is gravely concerned about the destruction of the environment in the Baltic Sea region. Environmental pollution recognizes no borders, and can best be tackled through regional cooperation. Resolute, urgent action is needed to protect the Baltic Sea and its coastal areas from pollution and eutrophication caused by a series of serious discharges into the environment. This will require new common measures and resources, and the Committee would emphasize that the EU should, first and foremost, support the activities of HELCOM for the implementation of the Baltic Sea Protection Programmes 1992-2012 and Agenda 21 for the Baltic Sea.

8) The ESC believes that regional and local cooperation in the Baltic Sea region is of key importance. Cross-border cooperation between towns and municipalities, businesses, educational establishments, trade unions, children and youth organizations, sports, women's and agricultural organizations, etc., should be encouraged. Similarly, the ESC attaches importance to cooperation between civic organizations and support for such cooperation. The EU should adopt measures to boost bilateral cooperation between the countries of the region. The ESC also endorses the EP's call for regional cooperation between Baltic Sea region MPs.

It is the ESC's belief that cooperation in the Baltic Sea region should, above all, centre on the needs of economic and social operators. It is important that trade and industry, employees, farmers, consumers and other key interest groups in society receive adequate information and that their views be taken into account through appropriate social dialogue. These groups should therefore be included in Baltic Sea cooperation at local, national and international levels. Structured interaction and appropriate consultation mechanisms could provide the best way to harness the know-how, experience and opinions of these groups; this is the best way for the EU and the Baltic Sea states to achieve good regional cooperation.

The ESC would point out that several of its earlier opinions have emphasized the importance of establishing bilateral contacts between itself and CEEC socio-economic interest groups. The ESC would reiterate this proposal and calls on the EU to support the establishment of joint committees and other opportunities - particularly for the socio-economic interest groups of the applicant countries - to establish contact with and get to know the ESC. This could be of considerable assistance in preparing non-EU countries for closer cooperation and accession.

9) The ESC believes that support for societal change in the non-EU member countries of the region is required so that a functioning society based on the rule of law can be achieved as soon as possible. There should be a shift in emphasis from direct aid to the creation of a suitable climate for investment. To this end, technical support should be sufficiently comprehensive and focus particularly on improving know-how and skills. Existing programmes (especially Tacis, Phare and Interreg) which also involve the Baltic Sea states, should be implemented as effectively as possible. The Committee therefore emphatically endorses the recent measures taken by the Commission to improve the administration of the programmes.

In order to get the best value from the support programmes in the Baltic Sea region, the Commission should also introduce measures to make it possible to combine projects from different programmes and to place greater emphasis on local and cross-border projects. The ESC endorses the Commission's recent initiative to encourage cross-border cooperation.

The ESC therefore calls for better coordination of the main objectives of support provided by the EU, international credit institutions and individual countries, and recommends that the EU allow sufficient scope for Baltic Sea cooperation in future structural and regional policies, and in the EU's financial framework for 2000-2006. In the future, EIB support could also focus on the Baltic Sea region across the Russian border.

10) The ESC takes the view that the CBSS provides a suitable forum to maintain and boost coordination of cooperation efforts in the Baltic Sea region. To this end, the role of the CBSS and EU participation should be stepped up. The Committee endorses the plans to establish a CBSS secretariat, and common databases etc. should be set up so that advances in Baltic Sea cooperation can be monitored and recorded reliably. The ESC believes it is important for all countries in the Baltic Sea region to redouble their efforts to implement nationally the guidelines established by the CBSS.

Brussels, 10 December 1997.

The President of the Economic and Social Committee

Tom JENKINS

() Näringslivets forskningsinstitut/ETLA: Barriers to Economic Cooperation of the Baltic Rim countries.

() Professor U.Kivikari: The Legacy of Hansa - The Baltic Economic Region, Otava Publishing 1996, C.Fredriksson: Handel och investeringar i Östersjöregionen 1996.

() Communication from the European Commission, CSE (96) 608 final: Baltic Sea Region Initiative (BSRI).

() European Council meeting in Florence, June 1996.

() Baltic Sea States Summit 1996: Presidency Declaration and Action Programme.

() CBSS, Fifth Ministerial Session, Communiqué.

() COM(97) 2000 final, volumes I, II and summaries and conclusions on the applications for accession.

() COM(97) 2006 final.

() COM(97) 2005 final.

() COM(97) 2007 final.

() COM(97) 2002 final.

() Report on the Commission Communication on the Baltic Sea Region Initiative, A4-0196/97, PE 220.283/fin.

() Communication from the Commission on Cross-border Cooperation within the framework of the Tacis programme, COM(97) 239 final.

() Annual Report for the period September 1996 to June 1997, WGEC 52.

() CBSS 6th Ministerial Session, Communiqué.

APPENDIX I

Other ESC opinions and information reports dealing with relations between the EU and the countries bordering the Baltic Sea

- EC relations with the countries of Central and Eastern Europe, additional Opinion, September 1991 (Rapporteur: Mr Petersen);

- Economic and social organizations in the countries of Central and Eastern Europe - consultative mechanisms, Opinion, November 1992 (Rapporteur: Mr Masucci);

- Relations between the European Community and the Baltic States, Opinion, March 1993 (Rapporteur: Mr Petersen);

- European Union/CEEC relations: common horizontal problems in the fields of the environment, energy, transport and telecommunications, Information Report, December 1993 (Rapporteur: Mr Masucci);

- Relations between the EU and Russia, Ukraine and Belarus, Opinion, January 1995 (Rapporteur: Mr Petersen);

- Evaluation of the Phare programme, Information Report, October 1995 (Rapporteur: Mr Gafo Fernández);

- Pan-European transport conference and social dialogue - from Crete to Helsinki, Own-initiative Opinion, April 1996 (Rapporteur: Mr Eulen);

- Commission report on the Single Market in Europe in 1995, Opinion, May 1996 (Rapporteur: Mr Vever);

- Commission communication on integrated management of coastal zones, Opinion, July 1996 (Rapporteur: Mr Bento Gonçalves);

- White Paper on the preparation of the associated countries of central and eastern Europe for integration into the internal market of the Union, Opinion, September 1996 (Rapporteur: Mr Masucci);

- The implications for the CAP of the accession of the countries of central and eastern Europe, Opinion, December 1996 (rapporteur: Mr Bastian);

- Relations between the European Union and the countries bordering the Baltic Sea, Information Report, March 1997 (Rapporteur: Mr Hamro-Drotz);

- Enlargement of the European Union, Opinion, October 1997 (Rapporteur: Mr Masucci);

- Commission Communication 'Agenda 2000`, Opinion, October 1997 (Rapporteurs: Mr Cal and Mr Moreland).

APPENDIX II

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