WRITTEN QUESTION E-2292/01

by Erik Meijer (GUE/NGL) to the Commission

(31 July 2001)

Subject: Eastern Europe at a permanent economic disadvantage as a result of the historical division of labour within a common market

1. Does the Commission share my view that the integration of new member states into the European Union will cause the fewest problems

when the standard of living of the countries concerned is more or less similar to the average GDP of the existing Member States and their convenient location makes it easy to attract and develop innovative businesses, as was the case with most of the earlier enlargements.

2. How does the Commission envisage preventing a situation in which future member states from Eastern Europe are permanently condemned to return to their traditional pre-1940 position, in which they were the poor backyard of the West, exporting cheap agriculture and mineral products and having to import expensive high-tech industrial products?

3. In the Commission's view, will a return to the division of labour as described in paragraph 2 mean that the standard of living in the East will continue to differ significantly from that in the West, resulting in a greater need for protection in those countries to enable them to safeguard and develop their own industries?

4. How many jobs have already been lost in the eight countries most likely to join in the near future, Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary and Slovenia, since 1990?

5. How many jobs will the same countries have to shed if they are to satisfy the environmental acquis?

6. How many jobs will be lost in these countries as a result of membership of a common market?

7. How many jobs would be lost as a result of introduction of the single currency, which will make it easier for purchasing power to be spent on foreign products?

Answer given by Mr Verheugen on behalf of the Commission

(19 October 2001)

1. The candidates for accession to the EU are in the process of convergence with the EU (convergence can be evaluated on the basis of per capita GDP in purchasing power parities). Clearly, the closer the level of development of the candidate countries gets to that of the EU, the easier their integration in the Union will be. However, the only economic criteria for accession are that the countries must have a viable market economy and be able to cope with the competition when they join the EU.

The Union has developed and enhanced a pre-accession policy designed to assist the accession candidates in working for convergence.

2. At present nearly all the accession candidates have a significant deficit in their trade balance with the EU. This is natural at their stage of economic development, since their economies are at the take-off stage: they need to import a great deal, particularly of capital goods. Similar situations have already occurred when other countries joined the European Community. The important thing is that the deficit should be sustainable (in terms of balance of payments). So it has been for nearly all the candidates. In the rare cases where accession candidates encountered difficulties in certain years, they were able to recover rapidly.

Past experience of trade integration with the EU indicates that there is a specialisation in production but that most trade is carried on within the same branches of the economy.

3. The Structural and Cohesion Funds should enable the future Member States to implement development strategies and modernise their economies, as has been the case with the Member States and regions currently receiving support from these Funds (see the Second Cohesion Report adopted by the Commission on 31 January 2001).

This should help to maintain a flow of direct foreign investment, allowing productivity in future Member States to be brought up to a level comparable with that of the EU.

4. As mentioned in the chapter on Social Cohesion in the Second Cohesion Report, between 1988 and 1997 the level of employment fell by nearly a fifth in the Central European candidate countries. The sharpest fall was in the early years of the transition period. The situations subsequently stabilised in some of these countries, with the unemployment rate falling.

5. Compliance with EU environmental standards may have an impact on employment in countries with particularly high-pollution industries, but measures to meet EU requirements will also create many jobs in sectors relating to environmental protection. These are sectors with a particularly promising future.

6. and 7. The overall effect of membership of a common market and the use of a single currency (in due course, when the candidate countries are in a position to introduce the Euro) will not be to reduce the number of jobs. On the contrary, it will help to create jobs, since resources will be better deployed and productivity increased, which will allow productive sectors to be developed.