Opinion of the Economic and Social Committee on 'The impact of the enlargement of the European Union on the single market (SMO)'
Date: 1999-09-22
Institutions: European Economic and Social Committee
Subjects: Central and Eastern European countries, accession to the European Union, economic statistics, enlargement of the Union, single market

17.11.1999

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Official Journal of the European Communities

C 329/39

Opinion of the Economic and Social Committee on ‘The impact of the enlargement of the
European Union on the single market (SMO)’

(1999/C 329/11)

On 29 January 1998, the Economic and Social Committee, acting under the third paragraph of Rule 23
of its Rules of Procedure, decided to draw up an opinion on ‘The impact of the enlargement of the
European Union on the single market (Single Market Observatory)’.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 22 July 1999. The rapporteur was Mr Vever.

At its 366th plenary session on 22 and 23 September 1999 (meeting of 22 September) the Economic
and Social Committee adopted the following opinion by 77 votes to three, with one abstention.

1. Preliminary comments

1.1.
The ‘common market’ has not stopped growing since
the European Community was established with six founding
members. Successive accessions have taken the number of
Member States to 9, 10, 12 and now 15. These enlargements
have been very positive for the single market, enhancing its
size, impact and economies of scale, without diluting either
the areas it covers or its achievements. With enlargement
have come bids to strengthen policies, driven by European
Commission programmes implemented by the Member States
working to the deadlines of first 1993 and then 1999.

1.2.
During the same period, the single market has also
embraced other non-EU European countries in many economic
and commercial areas, through cooperation and association
agreements centred on freedom of movement and the adoption
of entire sections of the corpus of Community single market
legislation. The countries concerned are the members of the
European Economic Area (the 15 EU Member States plus
Norway, Iceland and Liechtenstein) and also Switzerland, via a
bilateral arrangement. While extending the advantages and
requirements of the single market to the four non-EU members,
these agreements also greatly facilitated the transition-free
accession of Austria, Finland and Sweden in 1995, as the EEA
had enabled them to gradually incorporate most of the body
of Community legislation. Turkey too is linked to the single
market by a customs union agreement, concluded in 1962.

agreements providing for a high degree of free trade and the
gradual adoption of Community legislation. When the time is
right, there may be further applications from would-be EU
members in south-east Europe, marked in recent years by a
number of local conflicts, notably in Kosovo in 1999. Turkey
may also join the Union in the future, once it has complied
with the EU’s political conditions.

Against a geopolitical backdrop undergoing radical

1.4.
change, the ESC’s opinion has a two-fold objective:

— to take stock of preparations for enlargement and the
impact of enlargement on the single market, by drawing
on the experience of socio-occupational representatives on
both the EU and applicant country sides;

— to recommend means of facilitating the integration of the
applicant countries into the single market and ensuring
that the future enlarged single market is managed effec-
tively.

1.5.
The Single Market Observatory has based its work on
representatives. Dis-
four hearings of socio-occupational
cussions were held in Brussels on 13 and 14 July 1998 with
CEEC representatives and on 15 September 1998 with EU
representatives. Two special hearings also took place, on
23 June 1998 in Berlin with German representatives and
on 20 April 1999 in Prague with Czech representatives.
Consideration was also given to the conclusions of the social
partners’ conference on enlargement, held on 18 and 19 March
1999 in Warsaw.

1.3.
Today’s European Union is facing a new vista of
political enlargement, this time on a much broader scale. The
new process concerns 12 applicant countries: 10 central and
eastern European countries (Poland, Hungary, Czech Republic,
Slovakia, Estonia, Latvia, Lithuania, Slovenia, Romania and
Bulgaria) and two Mediterranean countries (Cyprus and Malta).
They too are already linked to the single market by association

2. New prospects

The enlargement of the single market will open up
2.1.
new horizons, bringing significant opportunities but also
greater demands if the full benefit is to be reaped.

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Unprecedented opportunities

2.2.
The political significance of EU enlargement is clearly
of historic proportions. The peaceful and democratic unifi-
cation of the continent, which is the natural extension of the
long process that began with German reunification in 1990, is
unprecedented and will ensure that there can be no going back
on the political and economic changes in the East. It will also
guarantee stability and cooperation for all the countries taking
part and their neighbours. Enlargement will enable the Union
to defend a common core of shared values while upholding
cultural diversity. It will give the EU greater weight in world
affairs, while providing an example to encourage other world
regions to establish similar political or economic groupings.

2.3.
Enlargement of the single market will bring many
economic opportunities, including further investment, markets
and trade, more producers and consumers, new openings for
cooperation, sub-contracting and economies of scale, fresh
growth prospects, new infrastructure projects both within the
CEEC and at trans-European level, and better means of stepping
up European competitiveness in the face of globalisation.

2.4.
Enlargement of the single market should also be a
positive factor in social terms — the full effects of which can
emerge only gradually — by facilitating exchanges, by raising
the standard of living and generating new jobs as a result of
further growth, by spreading the benefits of European social
legislation and, providing it is carried out in a well-ordered
manner, by balancing migratory flows.

Equally unprecedented challenges

broad linguistic and cultural diversity, and wide discrepancies
in development. The challenges are manifold: added compli-
cations with decisions requiring unanimity, the monitoring of
Community law and transposition into national legislation,
new requirements for customs harmonisation, the manage-
ment of Member State diversity, operation of the mutual
recognition system, the safeguarding of economic and social
cohesion, and preventing new national barriers.

2.8.
The social dimension will need special attention, if
complex demands are to be reconciled. On the one hand, care
must be taken not to provoke excessive migratory movements,
and to avoid upsetting the EU job market as a result of the
much lower social costs in the applicant countries. The quality
of existing social
legislation in the Union must also be
maintained. On the other hand, economic growth and employ-
ment in the candidate countries will need backing, bearing in
mind the need for a transitional period to integrate Community
social legislation in its entirety. Timetables should be drawn
up for the gradual and balanced completion of the necessary
adjustments.

It will be imperative to ensure that enlargement does
2.9.
not damage the cohesion of the single market, particularly
since the European Union does not currently have a further
programme for single market completion, and is restricting
itself largely to the adoption or transposition of the directives
covered by the previous programmes, with the exception of
certain additional target areas. Ill-prepared enlargement would
weaken single market cohesion.
It would undermine the
economic and social expectations to which every European,
from east or west, has a right. An orderly enlargement process,
however, means making the most of the preaccession period
to carry through changes and reorganisation. Step by step,
this will increase the single market’s dynamism and scope,
justifying all the effort invested to ensure this historical process
is a success.

2.5.
The challenges posed by further enlargement of the
single market are quite as great as the opportunities and are
much more complex than for previous enlargements.

3. Evaluating the situation

2.6.
It has to be borne in mind that single market inte-
gration has been an on-going process for the 15 Member
States, influenced by successive treaty reforms, the adoption of
further Community legislation and the introduction of the
euro. The level of
the applicant
countries is much higher than ever before.

integration required of

Enlargement of

the single market

3.1.
to include the
applicant countries is already well under way. This can be seen
not only from the agreements reached and the on-going
negotiations but also on the ground. Most of the applicant
countries’ external trade nowadays is with the European Union
and is for the most part tariff free.

2.7.
The current number of applicant countries is also
higher than ever before. Revolutionary ways will have to be
found to determine how best to organise and manage the
single market in view of the eventual near doubling of the
number of participating States, with many small countries,

3.2.
Significant progress was apparent at the hearings. First
and foremost was the acceptance of the process of change

Progress made

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in the applicant countries. This goes hand in hand with
acceptance of the rationale behind the European single market
and its demands and regulations, which are inextricably linked
to its benefits and opportunities. The conditional nature of
European aid was also understood and accepted.
In this
context, the smooth running of the single market and its
enlargement to central and eastern Europe were not felt to be
a contradictory concepts.

3.2.1.
Current efforts are focusing on the improvement
of economic factors, especially regarding growth and price
stabilisation. Trade between central and eastern Europe and
the European Union is continuing to expand. It now accounts
on average for 60 % of CEECs’ external trade (equivalent to the
level of trade among member countries) as against barely 30 %
in 1993. Taken together, these countries have now become
the EU’s second largest trading partner after the United States.
Investment, technology transfer and EU financial aid in central
and eastern Europe are already producing dividends, leading
to higher productivity, a new business and management
culture, and the modernisation of infrastructure (housing,
transport, energy, etc.) and of industrial production. They
have enabled the on-going development of the banking and
insurance sector and of other service activities such as business
and audio-visual services. Furthermore, the quality of products
and services has improved, there is a new trend towards
decentralisation, and pollution (water, air, industrial waste,
nuclear waste) has already been reduced considerably. There is
more cooperation on technical standardisation, health and
safety standards have risen and consumer organisation and
protection has been strengthened.

3.2.2.
The socio-occupational representatives from the EU
Member States emphasised their active and positive commit-
ment to enlargement of the single market and their desire to
step up their presence and investment and well as partnerships
and mutual exchanges.

The problems

3.3.
Though there was clearly agreement on the mutual
benefits of enlarging the single market and on the progress
being made, certain points of concern were nevertheless raised.

3.3.1.
On both sides, these related first and foremost to the
unknown elements in the political process that had begun.
There were still question marks hanging over countries’
differing rates of progress in the negotiations, accession
timetables, the scale of the successive enlargements and the
overall and even final extent of the enlargement process. The
many difficulties involved in the process, which looks to be
longer than expected, were also emphasised, including the
changeover to a new mindset and a complete turnaround from
an administered, controlled economy to one based on initiative
and accountability. Clarification of the operational conditions
for
enlargements would definitely help socio-
occupational operators to prepare more effectively.

future

3.3.2. Mutually-felt economic concerns included the risk of
distorted trade and competition conditions, difficulties in
adapting rules and structures, environmental protection prob-
lems, the cost of meeting standards, inadequate workforce
training and qualifications, the need to modernise the pro-
duction apparatus and commercial channels and the necessary
changes to the workforce, often superfluous in agriculture but
wanting in other sectors. The difficulties appeared to be all the
greater for countries that had delayed reform. Mention was
also made of insufficient cooperation between central and
eastern European countries (their mutual trade remained at a
fairly low level, even dropping as a percentage of their external
trade from 15 % in 1993 to 13 % in 1997) in spite of some
progress in cross-border regions. All
in all, there was an
overwhelming feeling that there was a lot to do at once and
that precautions would have to be taken and stages marked
out in the process.

3.4.

The applicant countries raised many further issues.

3.2.3.
Their counterparts in the applicant countries stressed
that they were not looking for extra protection as such but for
more effective means of adapting to the wider market and
competition, and for better access to the European single
market. They were ready to make the necessary efforts to bring
about change; they were confident of their ability to play a full
role in the single market and stressed the need to develop the
complementary features they could offer the European Union,
to benefit the enlarged single market, which was already
having a positive impact on both sides.

In general, the difficulties mentioned related to the
3.4.1.
complexity and constraints of implementing the corpus of
Community legislation, particularly since the countries of
central and eastern Europe have 40 years to catch up on.
Emphasis was placed on a competitive lag in the face of
heightened competition, trade balance deficits, restricted access
to the EU market for farm products, restrictions on Community
aid, concern to avoid a brain drain, and problems relating

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tothe development of a black economy. One observation was
that infrastructure (e.g. transport, telecommunications, energy,
water) is often still underdeveloped, which hinders the expan-
sion of trade. Mention was also made of the need to make
improvements in administration and in the public sector,
which is suffering in particular from the massive divergence
between public and private sector salaries. There was also a
concern to avoid the development of differences in the way
the applicant countries are treated, so that they are not branded
as fast- or slow-track applicants.

3.4.2.
Special attention was given to the difficulties facing
SMEs. Most find it hard to expand, are not ready for the global
market, lack capital and access to credit, receive little financial
aid from the EU, and are ill-informed about the real significance
of accession. The complexities of applying Community legis-
lation, and the cost to companies of change in particular, is a
highly sensitive issue for SMEs. There is also a desire to avoid
a changeover from domination by national public monopolies
to abusive domination of certain sectors by private (in
particular foreign) monopolies or oligopolies. Local businesses
must therefore be given the means to develop and restructure
in order to hold on to their market positions.

inadequate and often obsolete financial and distribution sys-
tems, accounting difficulties in relation to technical and
accounting standards,
restrictions on location (licences,
branches), shortcomings in intellectual property protection.
Mention was made of the high level of State aid, which has a
negative impact on the surplus capacity of certain sectors (e.g.
textiles, steel) at European and world level. Problems with
customs procedures also figured, especially for goods in transit
from former USSR countries. Factors such as price dumping,
failure to abide by environmental standards and illegal labour
were felt to distort competition. Reference was made to friction
on the western labour market (especially in the new Länder
and in Member States located on borders), the risk of social
tension if care is not taken, and problems for the border
regions of central and eastern European countries if they are
not given assistance. The issue of the relocation of businesses
and activities to the countries of central and eastern Europe
also came up.

3.5.2.
Some representatives questioned the institutional
capacity of administrations in the applicant countries when
faced with the difficulties of adjustment and abnormal compe-
legal
tition. Procedures were felt
to be too bureaucratic,
remedies were absent,
the monitoring authorities lacked
competence and independence, customs protectionism was
a recurring issue, certain regulatory, standardisation and
certification bodies lacked efficiency, there were difficulties
relating to mutual recognition, and fraud and corruption were
a problem.

3.4.3. Mention was made of the lack of practical support in
providing socio-occupational interest groups, businesses and
consumers with better information on the changes implied by
integration into the single market. The need is not so much
for financial support as for assistance from experts and
speakers, through missions and local secondments, not to
mention the use of new means of communication such as the
Internet. The EU, its organisations and its businesses should
follow the US example and take more initiative in these areas.
Particular consideration must be given to increasing public
understanding of,
involvement in and commitment to the
enlargement process in the applicant countries.

Shared needs

3.6.
The fears expressed by both sides must be addressed,
and one priority must certainly be to step up dialogue,
especially as the fears concern immediate problems whereas
the benefits may sometimes be felt to relate more to the
medium and long term.

3.5.

The EU Member States too raised several further issues.

Emphasis was placed on delays in adjusting regu-
3.5.1.
lations and liberalising the economy in the applicant countries:
persistence of non-tariff barriers to trade, restrictions on
freedom of establishment, disregard or challenging of the
legal and fiscal framework, maintenance of price regulating
mechanisms, failure to open up public procurement, com-
plexity and level of taxation, property purchase restrictions,
delays in privatisation (especially in the insurance sector),

3.7.
The joint aim should be to ensure that the enlargement
of the single market is conducted under balanced and well-
ordered economic and social conditions, in accordance with
the order of priorities on both sides, while keeping up the
momentum so as to avoid excessive delays. Enlargement must
not have the effect of lowering Community standards on
social, environmental and consumer matters, but rather of
disseminating those standards in the applicant countries to
promote common development that strikes the right balance
between the economic competitiveness of a wider single
market and the quality of life of the European public.

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3.8.
The issue of the conditions for integrating the applicant
countries into the economic and monetary union must also be
raised in relation to the enlargement of the single market.
Obviously, participation in the single currency can only come
as the final stage in the integration of the new members, and
will involve appropriate transition periods following accession.
However, although this stage is still a long way off, it must not
be ignored in the preparations for enlargement, but must be
included among the long-term objectives. The euro is now an
essential feature of the single market and it has been clearly
agreed that no opt-out will be allowed for the new Member
States once they meet the economic criteria for joining the
EMU. The European Union would therefore be justified in
providing for appropriate pre-monitoring of the applicant
countries’ economic policy guidelines, in accordance with this
long-term perspective. It should also make its aid conditional
on minimum requirements, taking into account specific levels
of development and the long list of hurdles the countries must
overcome to qualify for the EMU.

The socio-occupational

interest groups will have a
3.9.
special role to fill in facilitating this vast process of integration:
enlargement of the single market concerns them directly, over
and above the responsibilities falling to governments and
administrations. The success of the process will depend largely
on their direct involvement.

4. Priorities for the applicant countries

4.1.
The Committee stresses the need for the applicant
countries to hold firm in the process of adapting to the single
market. The first dividends, in terms of economic development
and an improved standard of living, are already emerging. The
aim must be to apply the corpus of Community legislation in
its entirety, in order to preserve the cohesion of the enlarged
single market and to ensure that
functions properly.
Transition periods could be allowed in certain cases and
subject to certain conditions, but the scope and duration of
such arrangements should preferably be kept to a minimum
once the countries actually accede to the European Union.
Ensuring the body of Community legislation is taken on board
under the best conditions as rapidly as possible means not just
adopting the necessary national legislation and regulations,
but above all promoting the economic and social reforms
these regulations imply, and, where possible, checking the
effectiveness and quality of the transposition of the regulations.

it

Priorities for action

The Committee also stresses the need to tackle the

4.3.
problems cited by stepping up reform in the following areas:

and

independent

representative

4.3.1. More effort must be made to further economic
liberalisation, on which accession depends, by means of a
series of measures. These should include bolstering the reform
of the state and administration, stepping up decentralisation,
strengthening
socio-
occupational organisations with contractual powers, continu-
ing and speeding up privatisation, developing price liberalis-
ation,
launching tax reforms suited to market economics,
applying monetary regulations, and giving more rein to
economic operators. The legal procedures needed for the
economy to function properly (e.g. debt recovery, etc.) must
be firmly in place, which means making the legal systems
more efficient. Competition policy must comply with the
provisions currently in force in the European Union. This
means that all the applicant countries must have efficient
national bodies to monitor competition conditions. Standard-
isation must be stepped up, by intensifying the transposition
of European standards, certification and mutual recognition.
Customs procedures must gradually be brought into line with
those of the EU, and goods in transit from third countries
(especially the former Soviet Union) must be monitored
effectively.

The modernisation of structures must be accelerated,
4.3.2.
with a particular emphasis on developing infrastructure (trans-
port, water, energy, telecommunications) and linking it more
effectively to that of the EU Member States as part of the
trans-European networks. A major effort must also go into
bringing research and innovation up to scratch. Sales and
after-sales structures must also be brought up to date, to
bolster economic efficiency.

4.3.3.
Better support must be made available to small
and medium-sized enterprises through a series of measures:
imparting a spirit of enterprise, providing training on modern
management methods, attracting capital and encouraging
profit-making, developing access to credit, a favourable fiscal
and quasi-fiscal environment which does not hinder their
development, simplifying regulations, and providing busi-
nesses operating on the international market with information
and support.

Environmental protection must be improved,

4.3.4.
in
particular using Community aid, even though projects will
often prove lengthy.

4.2.
The first move must be to continue and consolidate
the progress already made, in particular on rigour in economic
management, improved productivity and quality of goods and
services, business culture, and consumer education.

4.3.5.
The foundations must be laid for social progress
by building up the social dialogue, gradually implementing
Community social legislation and developing vocational train-
ing. It is desirable to control and channel migratory move-
ments, first to enable the applicant countries to hold on to the

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workforce they have trained, and second to take pressure off
the western labour market, where necessary allowing for
sufficiently long transition provisions in the area of labour.
The fight against the black economy must be intensified; much
will depend here on the success of the economic reforms.

implementation of Community legislation in the applicant
countries,
like those set up in the EU in recent years to
monitor the fifteen Member States’ progress on single market
completion. Socio-occupational representatives should be con-
sulted on and involved in their preparation and monitoring. It
is particularly important to have their views on the application
of reforms in the field and not to judge simply by what appears
in legislative and regulatory texts.

The best initiatives

To rise to the various challenges,

4.4.
the Committee
recommends that the applicant countries take a pragmatic
approach, based on practical initiatives in a series of key areas.
These initiatives must fully involve the economic and social
operators, who all too often feel that neither their governments
nor the European Union involve them sufficiently in the
enlargement process.

4.5.
Preparing the applicant countries for the single market
will take more than bilateral efforts between each country and
the EU. A common area should also be marked out for free
trade and cooperation between the countries of central and
eastern Europe, as under CEFTA (the Central European Free
Trade Agreement), which was launched for the Visegrad
countries several years ago. Cooperation and free trade must
be taken further within the CEFTA zone and the area should
be extended to include neighbouring EU applicant countries.
The inclusion of Romania in CEFTA marks a major step in the
right direction. This will require cooperation between border
regions and the encouragement of
initiatives by socio-
economic operators to that end. EU support programmes
should take this need into consideration and promote more of
this type of cross-cooperation.

4.6.
The corpus of Community legislation must be adopted
in its entirety but cannot be taken over all at once. Some
measures will prove more urgent than others during the
the issues
pre-accession period. Rather than pushing all
forward randomly, it would be preferable to move quickly to
see that small but significant areas work properly, before then
expanding the limits gradually to cover new packages of
measures every year.

4.7. Monitoring the transposition of the legislation will
involve developing strong independent authorities — both
administrative and legal — in the countries of central and
eastern Europe, to watch over transposition and the progress
of the reforms. Structures should also be set up to liaise
between these monitoring authorities and the Union, involving
the professional sectors concerned.

To trace the applicant countries’ progress on single
4.8.
market integration, the Committee recommends that regular
scoreboards be drawn up, at least once a year, charting the

The Committee also recommends proposing that the
4.9.
applicant countries set up single market coordination centres
and single market contact points for businesses and the general
public, along the lines of those recently set up in the EU
Member States. This could have several advantages:

In general terms, this initiative would have a major
4.9.1.
psychological and practical impact by confirming that those
countries are now within the orbit of the single market, by
involving them directly in the management of the enlarged
single market, and by offering them practical means of helping
their authorities, businesses and public to adapt more easily.

4.9.2.
Single market coordination centres in the applicant
countries would provide an informal means of finding bilateral
solutions to many of the practical obstacles to trade between
the EU and the applicant countries, especially problems of red
tape (in either the EU or the applicant countries).

4.9.3.
The parallel establishment of single market contact
points for businesses and the public would provide a means of
building up practical information on the opportunities offered
by the single market, especially for small and medium-sized
enterprises, consumers and the social partners, and thus make
up for the shortage of information mentioned in the hearings.

4.9.4.
Social and occupational interest groups would ben-
efit directly from the establishment of coordination centres
and single market contact points in their countries, and they
should play a front line role in helping them to work well.

4.10.
In general terms, the Committee also stresses the
importance of promoting social dialogue in the applicant
countries and between the social partners on both sides, as
recommended by the European social partners conference in
Warsaw in March 1999. The establishment of economic and
social councils or committees like those in several Member
States could also have a positive impact.

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4.11.
The development of customs cooperation between
the applicant countries of central Europe and the EU in all
areas should be a top priority for the cohesion of the single
market, without waiting for alignment on the common
commercial policy: the operation of customs posts (tightening
up border controls with regard to third countries, coordinating
with the European Union), improvement of procedures, better
reciprocity in terms of the treatment granted by the EU,
monitoring of free trade areas and free ports, fight against
fraud and counterfeiting, monitoring of the rules of origin,
reliability of the statistical system, gradual alignment on the
common commercial policy. This cooperation should be
founded on administrative assistance agreements, inspection
visits and customs training programmes. To that end, the
Committee recommends the setting-up of a customs cooper-
ation observatory,
interest
groups, to help monitor application in the various areas.

involving socio-occupational

Attention must be given to the issue of economic and
4.12.
trade relations between the central and eastern European
applicant countries and their former-Soviet Union neighbours,
on a number of counts: recent and on-going developments in
commerce and trade with those countries, the impact of
future
integration into the single market on that
prospects for economic relations between the enlarged Euro-
pean Union and the countries of the former Soviet Union.

trade,

4.13.
The issue of economic and trade relations between
the applicant countries and non-EU European countries that
are linked to the single market by association agreements (e.g.
the three EEA partners, Switzerland and Turkey) must also be
examined. It would be useful to pool ideas on methods and
results of integrating single market legislation in the associated
countries. There should also be a forward-looking debate into
the future of these relations following enlargement.

5. Priorities for the European Union

Essential institutional reform

5.2.
It is a prime requirement that the European Union
should reform its institutions and decision-making procedures
in order to adapt to further enlargement. The unanimity rule,
which will be a real barrier to decisions with almost double
the number of Member States, should be kept only for a few
exceptional cases. The extension of the majority voting system
seems inevitable if the single market is to operate properly
with 20, 25 or 30 members.

5.3.
The Committee welcomes the decision taken by the
European Council in Cologne to hold an intergovernmental
conference in 2000, with the intention of producing results
within that year. Its aim will be to revise the Treaty in key
institutional areas, and thus increase the coherence and
decision-making capacity of the European Union in time for
the next round of enlargements.

Completion of the single market

5.4.
The European Union should keep up the momentum
to complete the single market by devising a follow-up to the
programme that ended in 1998, in accordance with procedures
to be agreed. There must be no let-up as there is still a lot to
do. The Committee points out the need to remedy the delays
in harmonising legislation, especially regarding the definitive
VAT regime, the elimination of trans-national double taxation,
a scheme to facilitate mergers, a workable and attractive
financial
European company statute,
services, the opening up of public procurement, transport,
telecommunications and public monopolies, and the standard-
isation of intellectual property rights with a genuine Com-
munity patent. Adjustments will also have to be made
for electronic commerce and on-line services, which are
revolutionising trade conditions, and for the increased need
for standardisation in view of the introduction of the euro,
particularly in the tax field.

the liberalisation of

The European Union too must prepare for the enlarge-
5.1.
the single market by reforming its institutions,
ment of
speeding up its completion in key areas and involving the
applicant countries in the debate on the future management
of the enlarged single market. By meeting these challenges, the
European Union will ensure that rather than running counter
to the strengthening of the Union, enlargement of the single
market will further and improve its functioning, precisely
because of the greater demands involved.

The Committee also stresses the need to take great care
5.5.
to ensure that directives for which the deadlines have passed
have been properly transposed in all Member States. This is
not always the case: at the end of 1998, 15 % of single market
directives had still not been applied in all Member States.
Those States should be aware that in demanding that applicant
countries apply all Community legislation they have a particu-
lar responsibility to do so themselves and set an example.

C 329/46

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Official Journal of the European Communities

17.11.1999

5.6.
The Committee would also stress the need to promote
— with a view to the proper functioning of an enlarged single
market — a better balance in the choice of legal instruments
laying down the rules applicable to the single market, in order
to make the common rules more effective. The Committee
draws attention to the recommendation in its earlier opinion
that, when the common interest of single market cohesion is
directly involved, European legislation should place more
emphasis on regulations, which are applied directly and
uniformly, instead of resorting too systematically to directives.

5.7.
The Committee also stresses the need for the greatest
vigilance to ensure that mutual recognition arrangements
operate much more effectively. They will have even greater
importance after enlargement, and too many problems of
practical application still persist, as the European Commission
very appositely pointed out in a recent communication on the
matter.

5.8.
The Committee takes the view that work to simplify
Community legislation and especially to transpose it rapidly
into effective new regulations must also be stepped up. This is
particularly important for the SMEs in the applicant countries
that must apply Community legislation.

accurately on key areas (in particular improving the framework
of activities for companies and supporting the authorities that
are responsible for applying and monitoring application of
Community legislation); checks must be conducted to ensure
it is used properly, in accordance with conditionality criteria;
care must be taken to avoid distorting competition; and more
must be done to combat fraud. In general, the sights must be
set not on assistance but on development, with a view to
gradually phasing out rather than maintaining or increasing
the aid, encouraging greater use of loans or interest rate
subsidies and promoting private capital investment, a decisive
factor in development. Finally, the trend for greater support to
be given under the Phare programme to social measures needs
to be both further extended and enhanced.

6.2.
Consultation and cooperation between the EU and the
applicant countries for the purposes of integration must not
be restricted to states, governments and administrations. It
must also directly involve socio-occupational organisations
and businesses. The Committee stresses that the establishment
of strong and representative socio-occupational organisations
in each of the applicant countries, playing an active part in a
responsible economy mirroring the European economic and
is a necessary condition for the successful
social model,
enlargement of the single market.

Efforts must also be made to prevent new obstacles
5.9.
from arising at national level, an issue that will gain importance
with the increase in the number of Member States. The
Member States could ensure that their national legislation is
more euro-compatible by agreeing on a code of good practice
for the single market, as the ESC recommended at an earlier
stage. Euro-compatibility would aim to balance the need to
preserve the inevitably greater political, cultural and social
diversity of the enlarged European Union with the smooth
running of the single market.

First of all, the Committee considers that the socio-
6.2.1.
occupational organisations of
the EU countries must be
encouraged, with the support of Community programmes, in
particular PHARE, to support their counterparts in the appli-
cant countries, in terms of training and adaptation to inte-
gration into the single market. Partnership agreements, for
mutual cooperation and support, not least to facilitate trade,
should be developed within the framework of these organis-
ations.

6. Shared priorities for the applicant countries and the

EU

Supporting the applicant countries

EU aid to the applicant countries

6.1.
is extremely
important. It is impossible to ignore the fact that, following
the Berlin agreement on Agenda 2000, the multiannual budget
stretching until 2006 provides only very limited resources
compared with the scale of the need in the applicant countries,
if they are to integrate successfully into the single market. The
Committee therefore stresses that it is essential to take extra
care to ensure that optimum use is made of aid. Its impact
it must be targeted more
must be assessed systematically;

6.2.2.
Special emphasis must be placed on support for
SMEs. The main European programmes for companies (frame-
work programme for research, SME and craft sector support
programme, European Investment Bank loans, etc.) should be
more open to the applicant countries, helping them optimise
their financing (access to risk capital, interest rate subsidies,
guarantees from European financial institutions, etc.), encour-
aging them to use the European legal instruments that will
facilitate integration into the single market (e.g. European
patent, Community trade mark, EC certification, etc.), and
promoting transnational partnerships with EU companies.

6.2.3.
Consultation between socio-occupational organis-
ations must also be developed within the framework of the
European social dialogue, following on from the first social
partners’ meeting held in Warsaw in March 1999 with
Commission backing.

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Official Journal of the European Communities

C 329/47

A joint debate on the future of the single market

7. Economic and Social Committee initiatives

6.3.
It will not be enough simply to ask the applicant
countries to apply the single market in its current state. They
must be given the opportunity to prepare for coming changes
in the single market and to share their views on the common
objective for the single market in 10 or 20 years’ time. A single
market with 25 or 30 Member States will have requirements
and features that differ from those of the current single market
of 15 countries. Therefore, the Committee thinks it essential
to:

involve the applicant countries in the debate on the
6.3.1.
future of the single market, in particular through invitations to
sessions of the Internal Market Council;

6.3.2.
invite observers from the applicant countries to
participate in the committees and bodies responsible for
monitoring internal market workings;

include

applicant

6.3.3.
socio-
occupational representatives in the debate on issues surround-
ing administrative simplification and the prevention of new
barriers;

and their

countries

The Economic and Social Committee is aware of its
7.1.
specific responsibility to support the applicant countries in
integrating both into the single market and into the EU. As the
representative of civil society organisations, its primary duty is
to ensure the effective participation of the socio-occupational
operators of east and west in this major process.

To this end, the Committee intends to work on the

7.2.
following initiatives over the coming years:

7.2.1.
The Committee will continue to develop existing
contacts through the bilateral committees set up with socio-
occupational partners in the applicant countries, monitoring
developments and checking on specific priorities;

7.2.2.
The Committee will continue to hold annual meet-
ings with the socio-occupational representatives of central and
in order to track progress on the various
eastern Europe,
recommendations made in this opinion;

6.3.4.
launch a joint debate on the reform of the Com-
munity policies (including CAP) that are set to outlive Agenda
2000, into the years beyond 2006;

6.3.5.
start a forward-looking study into complementarities
and trade flows between the enlarged single market and its
regional neighbours, including the EEA and Switzerland, the
former Soviet Union and the countries of the Mediterranean
basin.

7.2.3.
The Committee’s Single Market Observatory will
carry on paying close attention over the coming years to the
smooth running of the process of involving the applicant
countries and their socio-occupational organisations in the
enlargement of the European internal market. In particular, it
will gradually extend the scope of its PRISM survey (Progress
Report on Initiatives in the Single Market) to cover initiatives
and good practice developing in the field, for the purposes of
promoting the single market.

Brussels, 22 September 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

C 329/48

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Official Journal of the European Communities

17.11.1999

APPENDIX

to the Opinion of the Economic and Social Committee

Enlargement/Statistics

Figures from year 1997

Czech
Rep.

Slovakia

Poland

Estonia

Latvia

Lithuania Hungary Slovenia

Bulgaria

Romania CC-10

EU15

Population (million)

10,3

5,38

38,64

1,5

2,5

3,7

10,3

2

8,3

22,75

105,37

374,565

Area in km2

78 866

49 034

312 685

45 227

64 589

65 301

93 030

20 253

110 994

238 391 1 078 370 3 236 180

GDP (billion EUR)

45,9

17,2

119,7

8,4

39,6

16,1

30,6

295,6

7 130 ,4

GDP/capita (100 EUR)

GDP/capita in PPP (100 EUR)

GDP/capita (% of EU-15)

GDP growth (% per year)

45

63

23

1

32

47

17

6,5

4,2

28

37

15

31

40

16

4,9

20

27

10

6,5

81

68

43

23

30

12

5,7

39

47

21

4,4

9

11

23

6

14

31

7

6,9

11,4

3,8

−6,9

−6,6

Food price index

104,4

105,4

112,6

89,3

102,5

106,1

117,5

108,6

1 224 ,6

Av. monthly wage (USD)

337,4

274,6

302,0

249,5

203,4

255

305,0

989,0

94,0

Unemployment (%)

4,7

11,6

11,2

10,5

14,4

14,1

8,1

7,3

15

249,7

118,0

6

Trade balance (MEUR)

20,084

7,754

22,707

2,567

1,429

3,382

16,842

7,382

3,126

7,434

92,707

10 737

Inflation (%)

Export to EU (%)

8,6

6,1

15

11,2

8,4

8,8

18,3

8,3

1 082,3(1)

154,8

59,90

45,00

63,50

48,60

48,90

36,70

69,90

63,60

44,10

28,1

189,83

—

—

—

—

—

—

—

—

—

157,1

—

10

—

—

—

—

—

—

—

—

56,60

52,30

—

Import from EU (%)

61,50

39,51

63,00

59,10

53,20

47,70

62,40

67,40

42,10

VAT (%)

—

—

—

18

—

—

25/12

—

—

MEUR = Million Euro
PPP = Purchasing Power Parity
CC-10 = Ten new candidate countries summarized (Cyprus excluded in the statistics)
(1) 1996: 123 %