Opinion of the Economic and Social Committee on 'Estonia's progress towards accession'
Date: 2000-07-12
Institutions: European Economic and Social Committee
Subjects: Estonia, accession to the European Union

C 268/24

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Official Journal of the European Communities

19.9.2000

Opinion of the Economic and Social Committee on ‘Estonia’s progress towards accession’

(2000/C 268/08)

At its plenary session of 21 October 1999, the Economic and Social Committee, acting under Rule 23(3)
of its Rules of Procedure, decided to draw up an additional opinion on ‘Estonia’s progress towards
accession’.

The Section for External Relations, which was responsible for preparing the Committee’s work on the
subject, adopted its opinion on 22 June 2000. The rapporteur was Mr Filip Hamro-Drotz.

At its 374th plenary session (meeting of 12 July 2000), the Economic and Social Committee adopted the
following opinion with 83 votes in favour and two abstentions.

1.

Background

Estonia regained its independence in 1991 and rapidly

1.1.
began to build closer relations with the European Union.

1.2.
Estonia concluded a free trade agreement with Finland
in 1992, with Sweden in 1993, and with the European Union
in 1995. The Europe Agreement between Estonia and the EU
was concluded in 1995. After a lengthy ratification process
the agreement entered into force on 1 February 1998. Estonia
currently has regional free trade agreements with the other
Baltic states, the Ukraine, the EFTA countries, Poland, Hungary,
the Czech Republic, Slovakia and Slovenia.

2000. The basic concept is that each country should progress
towards membership at its own pace. Turkey was granted
applicant country status at the Helsinki Summit.

1.6.
The opening of membership negotiations was one of
the recommendations made by the Luxembourg European
Council (December 1997) on preparations for EU enlargement.
The pre-accession strategy concentrates on partnership in
preparation for membership and increasing support for this
purpose.

Within the framework of this strategy, Estonia is striving
actively, but with limited resources, to meet the membership
requirements.

1.3.
The Europe Agreement is the formal basis for relations
between the EU and Estonia. The agreement addresses the
issue of free trade in industrial products and seeks to prepare
Estonia for full EU membership,
to bring the country’s
legislation into line with EU rules and to increase political and
economic cooperation.

1.7.
Estonia’s position is also influenced by regional cooper-
ation among the countries around the Baltic Sea as well as
efforts to strengthen the EU’s northern dimension. The objec-
tive is to improve security and socio-economic conditions in
northern Europe through regional cooperation also involving
Russia.

1.4.
The Europe Agreement provides for a ministerial level
Association Council, an Association Committee for high level
civil servants and a Joint Parliamentary Committee. The
agreement also makes provision for the establishment of a
Joint Consultative Committee comprised of socio-economic
players. A committee of this kind has not yet been set up with
Estonia.

1.5.
The European Union began membership negotiations
proper with Estonia in November 1998. Estonia was part of
the ‘first wave’ of applicant countries (the others were Poland,
Cyprus, Slovenia, the Czech Republic and Hungary). At the
time,
the other Baltic States — Latvia and Lithuania —
were not considered as meeting the criteria for negotiations.
However, at the Helsinki Summit of the European Council in
December 1999 it was decided to open negotiations with all
of the countries in question (Bulgaria, Latvia, Lithuania, Malta,
Romania and Slovakia). Bilateral negotiations began in March

2.

The main aim of the opinion

2.1.
In this opinion the Economic and Social Committee
wants to draw attention to matters which it feels are important
to the EU’s negotiations with Estonia on its future membership
of the European Union, as well as other activities designed to
prepare Estonia for membership.

2.2. Members of
the European Union are required to
implement Community legislation and to respect the principles
of a properly functioning market economy and of the rule of
law. In addition, Member States must have an operational
environment which allows them to adapt easily to open
interaction within the EU at all levels of society.

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2.3.
A prerequisite for this is the active operation in
society of free, independent, democratically elected citizens’
organisations, and in particular organisations representing
different socio-economic interests, which are capable of play-
ing an active role in socio-economic life, and have the
knowledge and skills to play a constructive role in the country’s
economic development and in resolving social problems.

In addition,

the assumption is that

2.4.
the country’s
authorities will seek to put the expertise of socio-economic
organisations to the best possible use in social and economic
development as well as in preparing the country for EU
membership. Depending upon the issue,
the relationship
between the authorities and these organisations is mainly one
of information, consultation, lobbying or negotiation. Their
awareness of the consequences of forthcoming EU member-
ship and the account taken of their views during the prep-
arations for membership are the best guarantees for successful
accession. Transparent relations between the authorities and
socio-economic organisations, which also provide added value
during the membership negotiations, are crucial.

THE OPINION OUTLINES THE PRIORITIES OF SOCIO-
ECONOMIC ORGANISATIONS

The opinion concentrates on Estonia’s economic and
2.5.
social situation from the perspective of socio-economic organ-
isations. The opinion presents views and recommendations,
focusing on the main priorities and problems for these players,
as well as their role in preparing Estonia economically
and socially for EU membership. The recommendations are
directed at both of the negotiating parties.

2.6.
As part of the drafting process for the opinion, the ESC
organised a hearing in Tallinn of representatives from various
Estonian ministries and the socio-economic players who are
active in the country. The views and recommendations of the
opinion draw on the findings of the hearing, but recognise
that they do not necessarily reflect conditions throughout
Estonia.

2.7.
The ESC has drawn up several opinions relating to this
topic (1). The views presented in them have been taken into
account in this opinion although they are neither referenced
nor referred to directly. Equally, the opinion does not repeat
the views and facts that have appeared during drafting in the
European Commission’s and European Parliament’s particu-
larly comprehensive reports and other documents relating to
Estonia’s accession.

(1) For example, the opinions on ‘Relations between the European
Sea’
Union
(OJ C 73, 9.3.1998) and ‘Reinforcing the pre-accession strategy’
(OJ C 157, 25.5.1998).

bordering

countries

Baltic

and

the

the

3. Views and recommendations

3.1. Economic and social relations in Estonia today

3.1.1.
Since first regaining its independence, Estonia has
been vigorously seeking to develop and enhance all its policy
sectors. Determined efforts are being made with all the political
means at its disposal to develop Estonia into a successful and
internationally competitive economy, which ranks with the
industrialised countries.

In its work the Estonian government has also realised
3.1.2.
the importance of socio-economic actors in the country’s
development, and as a consequence, dialogue procedures have
been set up with them. These organisations are consulted
mainly when legislation is being drawn up and in many
instances formal consultation mechanisms have been set up.
Formal dialogue procedures do therefore exist and are still
being developed, but it is also clear that they do not yet
function entirely satisfactorily. This is also partly because most
actors are still weak, as the overall level of organisation is low.
Efforts to improve dialogue must therefore continue. This can
be achieved, inter alia, by training officials, establishing IT
links, improving current practices (including the procedures for
requesting opinions), and more rapid information provision.

3.1.3. With regard to the Estonian labour market, reason-
ably effective cooperation has been achieved between the
social partners as well as between them and the state. In the
private sector terms and conditions of employment are mostly
determined at company level, even though some sector-wide
agreements do exist. The objective of employers’ organisations
and trade unions is to extend the scope of sectoral agreements,
although the poor level of organisation on both sides poses an
obstacle to this. In the public sector labour market relations
are based on tripartite cooperation, covering issues such as the
minimum wage and taxation.
In addition the authorities
negotiate directly with trade unions over public sector salaries
as there is no clear employers’ body for the state and local
authorities. Employment legislation and basic labour standards
— such as health and safety, pension arrangements and other
social security matters — are also being developed within the
framework of tripartite cooperation.

Many aspects of Estonia’s employment legislation are being
reformed. Collective redundancies, equal opportunities and
health and safety are examples of issues which are being
developed. Reforms are also being made to social security and
pension arrangements. A three-pillar pension system is being
established: a people’s/old-age/invalidity pension, compulsory
retirement and voluntary retirement. The provisions on com-
pulsory retirement are currently being drawn up. In addition,
consideration is being given to modernising training policy.
As the economy evolves the structure of the labour force is
also undergoing significant change. Unemployment is about
ten per cent although it varies a great deal between different
sectors and regions.

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There are various minority groups in Estonia. The largest of
these is the Russian-speaking minority, which accounts for
approximately 28 per cent of the population. This minority is
gradually integrating into society. The problems they face are
related mainly to the citizenship criterion which requires a
command of the Estonian language. However reforms to the
language law were recently approved to try to deal with this
problem. Among other things, an imperfect command of
the language makes it harder for Russian speakers to find
employment. It is clear that resolving the minority problem
requires a determined policy on the part of the government,
not least because of the EU’s rules on the protection of
minorities and non-discrimination. The programme approved
by the Estonian government in March 2000 on integration
into Estonian society over the period 2000-2007 is necessary
in this respect.

3.1.4.
Over the past few years Estonia’s economic develop-
ment has been particularly promising. There are however some
elements of uncertainty, such as the balance of payments
deficit, large market changes and changes in the production
structure, rising inflation and debt-financed consumption.
Estonian industry and business are still in the throes of change.
Business development has taken place without any real support
from the state and many uncompetitive companies have gone
out of business. A very liberal economic policy and competitive
production costs have resulted in a good deal of new
investment flowing into the country. The privatisation of
state-owned companies has almost been completed. The
internationalisation of Estonian companies,
inward foreign
investment, and joint ventures with Estonian companies have
all been significant. In addition, the number of small and micro
businesses is growing rapidly. The structural changes in the
economy are therefore striking, with the balance shifting
towards the service and financial sectors, while companies
mainly in the energy sector and heavy industry are faced with
an urgent need to modernise. Key background information on
Estonia can be found in Appendix 1. Estonian business interest
representation is still undergoing a considerable process of
change, although the Estonian chamber of commerce and
industry, for example, already has an established position.
Interest groups have relatively good links with the authorities.
Many international companies operating in Estonia are also
members of these organisations. Foreign companies operating
in Estonia could help to influence the development of the
Estonian labour market through their knowledge of modern
labour market practices, among other things.

There is still a relatively large degree of uncertainty and
indifference among Estonians regarding EU membership
related issues — one third are in favour of membership and
about a third are against. The proportion of those opposed has
grown recently.

The agricultural sector and the food industry are
3.1.6.
facing major change. Prior to regaining its independence they
were two of the key economic sectors in Estonia. Half of the
milk and meat production was exported to Russia and eastern
markets continue to be important to many companies. The
range of products produced in the past was more extensive.
During the 1990s agricultural production fell dramatically and
rural areas are currently undergoing some upheaval. So far few
determined efforts have been made to develop rural areas and
to preserve their vitality. Estonia has consciously pursued a
liberal agricultural and trade policy, avoiding production
subsidies and export and import restrictions. The Estonian
interest groups representing farmers have good working
relationships with the agricultural authorities.

3.1.7.
Estonian cooperative societies are not of much
relevance to EU countries, even though they can bring
considerable benefits to their members. The conditions for
developing market gardening are good.

3.1.8.
The Estonian consumer body has set itself ambitious
objectives, even though its opportunities for exerting influence
are still marginal.
Its main aim is to improve consumer
protection, product quality and safety, as well as to influence
the pricing of the state-run electricity, heating (etc.) companies.
Contacts have been established with the authorities, but
consumer protection in Estonia remains a relatively new
phenomenon.

Estonian socio-economic organisations are relatively
3.1.9.
new. The level of organisation is low and their structures are
still being developed. There are problems with their funding
(mainly through membership fees) and management, and they
do not have adequate human resources for activities such as
research. As a consequence many organisations are still very
weak at both the level of their central organisation and
sectorally. Their credibility as interest groups vis-à-vis the state
suffers as a result. Their experience of government prior to the
country regaining its independence means that some Estonians
have a rather reserved attitude to joining the different interest
groups which exist.

3.1.5.
A determined education policy and other means are
needed to ensure that Estonia has sufficient human capital for
the economic renewal which it
is undergoing. Similarly,
the threat of a brain-drain exists (according to Eurostat’s
calculations, Estonia’s GNP in 1995-97 was approximately
foreign
one third of
companies operating in Estonia can also contribute to
developing the skills of their employees.

the EU average). At another level,

THE RELATIONSHIP BETWEEN THE STATE AND ORGAN-
ISED PLAYERS DOES NOT POSE AN OBSTACLE TO EU
MEMBERSHIP

3.1.10.
The ESC is of the view that although social relations
in Estonia are still in need of improvement, the institutional
and practical operating conditions for socio-economic organis-
ations are of a sufficiently high standard for them not to call
Estonia’s membership of the EU into question.

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3.1.11.
economic relations in Estonia,
following additional measures:

Nevertheless, with a view to enhancing socio-
the ESC recommends the

— A ‘bench-marking’ model is being developed in Estonia
for comparing the progress of different socio-economic
factors with EU Member States and other applicant
countries.

— Setting up or stepping up existing EU funded programmes
aimed at
improving dialogue between the Estonian
authorities and socio-economic organisations through
the medium of information technology.

— The EU should encourage and support Member States’
organisations and their EU-level bodies (Unice, ETUC,
Eurochambres, UEAPME, COPA/Cogeca, etc., as well as
any sectoral bodies belonging to them)
to step up
their technical assistance (e.g. training) to their Estonian
counterparts. The different sources of technical assistance
need to be coordinated effectively. Inward-investing com-
panies have a key role to play in channelling know-how.
The importance of the support provided by the Nordic
Council should also be highlighted.

— The EU should support

the Estonian authorities in
developing and strengthening the country’s internal
regional policy, so that the economy and living standards
develop as evenly as possible across the country. This
would also help to ensure an improvement in the position
of the Russian-speaking minority and its integration into
Estonian society.

— The EU should support the Estonian authorities in their
efforts to improve education policy, spread computer
literacy, and develop information and communication
technology (ICT) infrastructure in accordance with the
guidelines of the eEurope strategy.

— The EU should help Estonia and its organisations to
develop regional (mainly Baltic Sea region) cooperation
with neighbouring countries and their organisations.

3.2. Preparing for European Union membership

3.2.1. T h e p r e p a r a t i o n p r o c e d u r e s

3.2.1.1.
The Estonian government’s pre-accession pro-
gramme is ambitious, aiming to prepare the country for
membership at the beginning of 2003. Determined and all-out
efforts are being made to get the country ready. These efforts
are to be praised. There is however a clear risk that the quality
of the preparations will suffer as a result of the speed at which
they are taking place. It is evident that the results of the
subject-specific negotiations and their practical consequences
have not always been sufficiently well prepared, or, at least,
have not yet been implemented in practice.

3.2.1.2.
The Estonian government is seeking to ensure that
socio-economic organisations are consulted in the negotiation
preparations and has established a mechanism for this purpose
consisting of subject-specific working groups. These meet
regularly and relevant interest groups may be invited to attend.
In addition, in November 1999 the foreign ministry set up a
consultative committee to assist the leader of Estonia’s EU
negotiating delegation. Regular updates on the negotiations
are provided.

3.2.1.3.
A formal consultative mechanism does therefore
exist and according to the authorities it works reasonably well.
However, such organisations feel that they are not always kept
sufficiently up-to-date and that their scope for influencing the
content of negotiations is marginal. At the governmental level
developments are extremely rapid and these organisations are
finding it difficult — not least in view of their limited resources
— to form well-considered views on the subjects being
discussed. Opinions — often on many different topics cur-
rently under discussion — usually have to be produced at
short notice. This does not leave their members, including
SMEs, enough preparation time. Language problems can also
arise if the background documents are only available in the
EU’s official languages. Estonian players often do not have the
capacity to prepare and present necessary contributions. This
has the result
that socio-economic organisations do not
support the decisions which have been taken and in some
cases actually oppose them (for example the impact of
In
membership on free trade between the Baltic states).
addition, when membership related issues are being discussed
by the parliament, Estonian MPs often seem to be poorly
informed. A particularly serious problem is posed by the fact
that businesses are constantly having to adapt to an extremely
large number of new rules — including those relating to
working conditions — within very short deadlines, which
causes both funding and management problems.

IMPROVING ESTONIA’S PRE-ACCESSION PROCEDURES

The ESC recommends that

3.2.1.4.
the procedures for
Estonia’s membership negotiations are reviewed so that all
relevant parties are involved more closely in the preparation
of ongoing issues. The ESC urges the European Union to
address this issue during the negotiations and to step up its
assistance to Estonia and Estonian actors for this purpose.

3.2.1.5.
The Estonian government has sought to develop
its civil service so that it has the necessary expertise for
conducting the EU membership negotiations. The level of
in fact, quite high among the country’s fairly
expertise is,
young body of civil servants, but the human resources are
limited and the number of officials with expertise is quite

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small. This means that there is not enough information, nor
the means to acquire it, on the practical consequences of the
subjects being negotiated, such as the impact on business and
the labour market. For example, the need to make large
investments in environmental protection in industry has been
recognised. It is also known that the cost will be considerable.
The government’s position has been that the costs should
mainly be borne by the private sector; however, the private
sector cannot afford this. A workable solution to this problem
remains to be found in Estonia.

IMPROVING THE CAPACITY OF THE ESTONIAN CIVIL
SERVICE TO TAKE THE NECESSARY VIEWS ON BOARD AS
WELL AS THE CAPACITY OF ACTORS TO PREPARE AND
PRESENT OPINIONS

3.2.1.6.
The ESC recommends that, the Estonian govern-
ment steps up its efforts to reinforce the capacity of the
Estonian civil service. These efforts should be directed at both
national and regional
level civil servants, as well officials
working for implementation and compliance bodies (certifi-
cation, industrial rights, competition, customs, law and order
and the courts, consumer protection, agriculture, regional
development, etc.). Policing and border controls should also
be improved in order to fight organised, cross-border financial
and other crime. Similarly efforts should be made to establish
how organisations can be helped to become more credible
defenders of particular interests. Technical assistance, training
and apprenticeships, as well as familiarisation with practices
in EU countries are the priorities in this respect.

The Estonian government has sought to provide a
3.2.1.7.
great deal of public information in order to inform citizens
adequately about the membership negotiations. Local auth-
orities have set up EU information points, ministries have
separate integration secretariats and EU handbooks and other
information have been produced and distributed. The formal
machinery is good, although on a practical
level many
problems remain with the dissemination of information. For
example, not even organised players are adequately informed.
This also results from their poor responsive capacity and low
level of interest. Misinformation in the public debate, one
example being that the forthcoming price and tax increases
are being attributed to future EU membership, needs to be
rectified urgently.

INCREASING PUBLIC DEBATE ON EU MEMBERSHIP

The ESC firmly supports

3.2.1.8.
the Commission’s
decision in May 2000 to adopt a separate communication
strategy on enlargement which will be used to finance public
information provision. The Committee encourages determined
in cooperation with the Estonian government, to
efforts,
decisively improve the level of knowledge and public debate.
In particular, civil society organisations should increase the
role they play in the reflection process, the dissemination of
information and the public debate on the challenges posed by
EU membership. Among other things, printed information
should be easier to understand. The most important documents

concerning membership should also be made available in
Estonian and Russian. The information dissemination channels
of these organisations — most commonly their members’
newsletters — should be used to provide information on EU
matters.

ADAPTING THE PACE OF PROGRESS IN THE NEGO-
TIATIONS TO ENSURE THE BEST RESULTS

3.2.1.9.
The ESC considers that on the basis of the above-
mentioned views, Estonia needs to consolidate its internal pre-
accession procedures and to adapt the pace of the negotiations
in order to ensure the best results. The realistic ability of the
country to cope with the reforms should be taken into account.
In the Committee’s view this will have an important impact
on public opinion and on how Estonian interest groups and
citizens feel about EU membership, as the attitude towards
membership will in due course be determined on the basis of
the outcome of the membership negotiations.

3.2.1.10.
Research and reports on EU matters must also be
promoted. Indeed, too little is known about the consequences
of many important issues relating to EU membership. For
example, the impact of new competition and external customs
rules on different business sectors, the sectoral
impact of
membership on the labour market, social security and employ-
ment, issues relating to the free movement of people and
the impact of membership on economic issues
services,
(incomes, prices, taxation, etc.), the consequences for product
and consumer safety are all extremely important as regards
decision-making, the credibility of the preparations, and public
attitudes towards EU membership. Independent research must
be increased and Estonian actors should be involved in this.
However their capacity to do so must be improved.

3.2.2. T h e r e a d i n e s s o f d i f f e r e n t s e c t o r s

3.2.2.1.
Among the greatest challenges which EU member-
ship poses for industry and business are the changes to existing
free trade agreements, environmental protection, product
safety and product liability standards, as well as maintaining
and improving competitiveness within the EU’s single market.
The situation varies considerably from sector to sector. The
Estonian financial, transport and other service sectors are
particularly competitive, as is the country’s information and
communication technology. In contrast, traditional sectors,
such as heavy industry, are often in a weak position, having to
contend with the challenges of structural change, rationalis-
ation and environmental protection. In May 2000 the industry
ministers of the EU and applicant countries discussed industrial
reform and competitiveness. These discussions need to be
continued and pursued in greater depth.

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THE NEED TO DRAW UP AND IMPLEMENT ECONOMIC,
INDUSTRIAL AND EMPLOYMENT STRATEGIES

food products does not yet meet EU standards. Compared
with production in many EU countries, Estonian livestock
production has been concentrated in relatively large units.

3.2.2.2.
The ESC recommends that work begin on drawing
up a sectoral operating strategy for Estonian business, as well
as a regional
industrial cooperation strategy designed to
promote investment, finance and other business operating
conditions between Estonia and its neighbours. Determined
efforts should also be made to implement the mid-term
economic policy priorities (2000-2003) evaluated by Estonia
and the EU in March 2000. A national employment strategy
consistent with the EU’s employment guidelines should be
drawn up on a tripartite basis. The joint employment assess-
ment concluded recently by the Czech Republic and the EU
can serve as a useful example in this respect.

3.2.2.3.
Estonia’s readiness for EU membership and its
adjustment to the four freedoms requires bringing its social
policy and labour market legislation up to EU standards. This
also applies to the implementation of this legislation. To
succeed in this,
labour market organisations need to be
involved and general labour market operability needs to be
brought into line with that of a market economy.

EMPLOYMENT CONDITIONS ARE IN NEED OF FURTHER
REFORM

The ESC is of the view that Estonia needs to
3.2.2.4.
continue its efforts to bring its legislation on employment and
job placement into line with EU standards as well as to
improve its legislation on workplace health and safety, above
all with regard to implementation and compliance. In addition
cooperation between
to developing tripartite
levels should be
employers and employees at different
improved. The EU and its Member States’
labour market
organisations should support the efforts of Estonian labour
market organisations to develop an effective labour market
and to increase the opportunities for dialogue.

relations,

Estonian agriculture and its food industry represent
3.2.2.5.
a relatively small proportion of Estonia’s overall economy.
Primary production accounts for some 7 % of GNP. The food
industry is nevertheless Estonia’s largest industrial sector,
constituting roughly 25 % of all industrial production. Faced
with the prospect of EU membership the agricultural sector
and the food industry are in need of reform. For example,
Estonia does not yet have a comprehensive land register, and
as a result does not have a properly functioning property
market. This makes it considerably more difficult to fund
agriculture. Indeed, the slow progress in the country’s privatisa-
tion process stems largely from unclear land ownership
conditions and a shortage of surveyors. The liberal trade and
agricultural policy pursued by Estonia has contributed to
creating a very unstable environment for farmers. There are
weaknesses in the Estonian food production chain with regard
to the requirements of EU rules. In many cases the quality of

THE NEED FOR AGRICULTURAL AND FOOD INDUSTRY
REFORM

The ESC is of

3.2.2.6.
the view that reforms in the
agricultural sector and food industry should concentrate on
the following:

— Stepping up efforts to create a more stable operating
environment for farmers. This would help to stabilise the
volume of production.

— Improving Estonia’s border controls further, and estab-
lishing effective import controls and a competent certified
customs laboratory.

— Completing the country’s privatisation process and the
immediate establishment of an effective land register.

— Continuing the reforms to improve the quality of Estoni-
a’s food production chain, from the field to the table.
Among other things the production machinery and
technology of farms and the food industry are in need
of considerable modernisation. Estonia needs to make
progress in reaching the EU’s hygiene and quality stan-
dards. This would also create export opportunities in new
markets for Estonia which would contribute to providing
stability for both the food industry and farmers. The EU
needs to decide how it can support these structural
reforms, as well as how the trade policy problems facing
agricultural products can be resolved, with a view to
ensuring that Estonia ends up with a viable agricultural
sector and food industry. There is a need for capital
investment
in production machinery and vocational
training throughout the agricultural sector. These will in
due course result in increased revenue. Efforts to develop
agriculture must also pay greater attention to environ-
mental protection, including water quality.

— Encouraging family farms and production, processing
and selling based on cooperative principles. The EU must
actively assist these efforts as the European agricultural
model
is based on agricultural multifunctionality and
family farms.

3.2.3. G e n e r a l a s s e s s m e n t o f E s t o n i a ’ s r e a d i -

n e s s f o r m e m b e r s h i p

ESTONIA IS MAKING GOOD PROGRESS TOWARDS MEM-
BERSHIP IN SPITE OF LIMITED RESOURCES

3.2.3.1.
On the basis of the views expressed above, the
ESC’s general conclusion is that the real obstacle facing Estonia

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in ensuring that its membership of the EU is sustainable lies
essentially in the limited resources available for preparing and
the views of different players when
taking into account
establishing policy positions, implementing, complying with
and monitoring compliance with changing legislation and
regulations, as well as in developing the public debate.
Workable solutions must also be found for making adminis-
trative improvements and financing necessary investment.
Limited resources are an obstacle for a small economy. Under
these circumstances efficient allocation and priority setting are
crucial.

3.2.3.2.
However this is not just a problem facing Estonia.
The EU must also help to reduce the above-mentioned
obstacles as it has committed itself
to working towards
Estonian membership. The EU must show through its positions
in the negotiations, the different pre-accession projects and the
public debate that it has unreservedly committed itself to
working to promote Estonian membership. The ESC urges the
EU to examine the support programmes aimed at preparing
Estonia for membership in their entirety as its top priority.
The EU must speed up the introduction of programmes such

as ISPA and SAPARD and ensure that they are managed
efficiently and flexibly and that they respond quickly to change.
The effectiveness of the Phare programme must also be
ensured through permanent critical evaluation. In cooperation
with Estonia the support programmes must be targeted more
specifically at correcting the main problems outlined in
this opinion. New support instruments must be created if
necessary. Among other things it must be ensured that
Estonians are given sufficient opportunities to participate in
EU research, student exchange and other similar programmes.

3.2.3.3.
The ESC intends to continue its links with, and
support for Estonian socio-economic organisations with a
view to improving their ability to participate in Estonia’s
preparations for EU membership. The Committee believes that
this will enhance Estonia’s readiness for EU membership, while
commanding the far-reaching support of both Estonians and
In order to improve the joint participation
EU citizens.
opportunities for both Estonian and EU socio-economic
organisations during the membership negotiations, the ESC
urges the EU and Estonia to lose no time in setting up a Joint
EU-Estonia Consultative Committee of socio-economic interest
groups on the basis of the Europe Agreement provisions.

Brussels, 12 July 2000.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

19.9.2000

EN

Official Journal of the European Communities

C 268/31

APPENDIX I

on the Opinion of the Economic and Social Committee

Key facts about Estonian economy

National currency: the kroon (EEK) (100 sents = 1 kroon)

Currency system: modified currency board

Currency peg: 8 EEK = 1 DEM

Currency peg and currency board fixed by law since June 1992

Central Bank’s exchange rate May 25, 2000: 1 USD = 17,1743 EEK; 1 EUR = 15,6466 EEK (fixed through DEM)

Tax system: 26 % flat income tax, reinvested corporate profit is tax free; 18 % VAT

Key indicators (estimated)

1997

1998

1999

2000

GDP Change y-on-y (%)

10,6

4,0

– 1,1

5,5

GDP per capita

44 118

50 502

51 716

56 770

Inflation (annual average %)

Current account balance (% of GDP)

11,4

– 12,1

8,2

– 9,2

3,7

– 4,5

Annual FDI (mill EEK)

Population (estimate mill)

Average Monthly wage (EEK)

3 694,1

8 071,4

4 468,3

1,45

3 573

1,44

4 125

1,44

4 413

3,8

– 5,6

—

1,43

4 825

Trade balance (mill EEK)

– 20 925,2

– 21 812,4

– 11 809

– 12 991

Average unemployment (%)

10

10,1

11,9

11,4

(*) The percentage of the unemployed according to ILO methodology.
Sources: Ministry of Foreign Affairs of Estonia http://www.mfa.ee,
Ministry of Finance of Estonia http://www.fin.ee,
Bank of Estonia http://www.ee.epbe