Opinion of the European Economic and Social Committee on "The impact of the enlargement of the European Union on the single market"
Date: 2002-12-12
Institutions: European Economic and Social Committee
Subjects: Community acquis, deepening of the European Union, development policy, economic and social cohesion, enlargement of the Union, single market, transitional period (EU)

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

(2003/C 85/23)

On 17 January 2002 the European Economic and Social Committee, acting under Rule 29(2) of its Rules
of Procedure, decided to draw up an additional, opinion on ‘The impact of the enlargement of the
European Union on the single market’.

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 6 November 2002. The rapporteur was Mrs
Belabed.

At its 395th plenary session (meeting of 12th December 2002), the European Economic and Social
Committee adopted the following opinion by 77 votes to 12, with 7 abstentions.

Summary

A.
The enlargement of the European Union is an issue of
major political, social and economic importance to the future
of the EU. It provides a unique opportunity of ensuring lasting
peace and stability in Europe.

B.
Although the process of transformation has required
large sections of the population to make considerable sacrifices
and has led to major economic and social upheavals, the
negotiations on the enlargement process are now in the final
stages.

The EESC shares the view of the Danish presidency that
C.
the timetable for EU enlargement should be respected, bearing
in mind the progress which has been achieved in the individual
states concerned.

D.
The enlarged single market will bring many economic
advantages and will strengthen the competitiveness of the EU
in the global market, provided that the Union manages to
exploit its existing potential rather than allowing it to go
unused. One of the key elements concerned here is the
utilisation of the existing workforce.

E.
A factor of decisive importance to public acceptance of
EU enlargement will be the way in which the benefits of
enlargement are distributed throughout the population.

F.
There is a need to continue to press ahead with and
support efforts to develop the capacity of the systems of
administration and judiciaries in order to ensure that EU legal
provisions do not simply exist on paper but are also applied
and complied with in practice.

G.
The adoption of the existing body of EU laws and
economic integration are bringing about economic and social
upheavals; a number of measures are being taken to overcome
including the proposal by both sides of
these problems,

transitional provisions. Whilst these measures are facilitating a
more readily acceptable form of integration, they are also at
the same time bringing about a division of the single market;
transitional provisions should therefore be used sparingly.

Effective support for the restructuring process and the
H.
removal of economic and social discrepancies between the
existing Member States and the future Member States — also
after their accession — are key prerequisites for a coherent
economic and social development of the new EU as a whole,
in line with the Lisbon objectives. Efforts need to be made in
all areas of EU policy in order to remove, as quickly as possible,
the differences between the existing regions of the EU and the
new EU regions.

I.
Special measures need to be taken in respect of border
regions. It is essential to develop cross-border policies and
cooperation if the potential available to border regions is to be
utilised and also in order to protect these regions against
detrimental development.

A large number of specific programmes have been
J.
introduced in order to prepare the candidate states for EU
accession; the candidate states are also participating in some
of
the programmes and measures for the EU-15. These
measures are providing the support for the accession measures.
Some of the former programmes do, however, involve such a
high degree of bureaucracy that it is scarcely possible for the
candidate states to make use of them. It would be advisable to
review these programmes with a view to simplifying them.

K.
The EESC is lending its support to the enlargement
process by organising hearings of the Single Market Observ-
atory (SMO) in the candidate states and by cooperating with
the social partners in these states. The EESC has also set up the
PRISM (Progress Report on Initiatives in the Single Market)
database, an information tool which documents measures of
importance to the development of the single market. The EESC
has put forward a number of proposals for developing the
single market,
that single market
coordination centres be set up in the candidate states.

including the proposal

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1.

Introduction

1.1.
The enlargement of the Community is a matter of
major importance for the future of the European Union since
it provides a unique opportunity of ensuring lasting peace and
stability in Europe and it offers an historic opportunity to
unite the European states on the basis of common democratic
values. In addition to the long-term safeguarding of peace and
political stability in Europe — which is clearly the number one
consideration — the process of EU enlargement also brings
with it a large number of economic and social opportunities
and challenges.

in many cases,

1.2.
The transformation process will require considerable
sacrifices to be made by large sections of the population of the
candidate states and will,
involve major
economic and social upheavals. The accession negotiations
with the ten candidate states (Slovenia, Hungary, Slovakia, the
Czech Republic, Poland, Lithuania, Estonia, Latvia, Cyprus and
Malta) have already made progress and are now close to
achieving a final outcome. The situation in Cyprus and Malta
has to be looked at in a rather different historical light since
these two states did not have to undergo a change of system.
Bulgaria and Romania have to complete a longer catching-up
process and have set themselves a later date for EU accession.
The EESC has already adopted an opinion covering the
geographical and political situation of Kaliningrad.

According to the estimates made by the European
1.3.
Commission, all of
the above-mentioned states, with the
exception of Bulgaria and Romania, will shortly be in a
position to withstand the competitive pressure in the single
market of the EU. These eight states have a viable market
economy. Considerable efforts have also been made in the
fields of administration and justice in order to ensure that the
necessary general conditions are in place to enable the
economies of these states to integrate into an extensive single
market. In this context we should not overlook the fact that
the very prospect of joining the EU speeds up the process of
transformation. Unnecessary prevarication and the attendant
disappointments for the candidate states therefore need to be
resolutely opposed.

The EESC shares the view of the Danish presidency (1)
1.4.
that the timetable for EU enlargement should be observed.
The individual states have, however, made varying levels of
progress. Those candidate states which meet the criteria set
out at Copenhagen could, following the conclusion of the
negotiations, become members of the EU at the scheduled
time.

1.5.
The tremendous mass of legal provisions, requirements
and rules generated by the economic integration of the
candidate states with the existing EU Member States makes

( 1) As expressed by the Danish Minister for Employment at the EESC

plenary session on 18.7.2002.

higher demands on the candidate states than occurred in the
case of the earlier accessions to the EU. Unlike what happened
in the case of the earlier enlargements, these new requirements
have a bearing on:

i)

ii)

the size (as regards population and surface areas of the
candidate states),

the development of the EU itself and the deeper level of
integration which has taken place since the earlier
accessions, and

iii)

the relatively weak economic power
measured by per capita GDP) of the candidate states.

(above all as

The enlarged EU will differ markedly from the existing
1.6.
EU-15. Enlargement to EU-27 will bring a 34 % increase in the
surface area of the EU and a 28 % increase in its population.
GDP, however, will increase by only 5 %. This will mean a
consequent drop in per capita GDP of 18 % in statistical terms.
The differences in income levels between states, regions and
individuals will increase tremendously. It will take between 10
and 30 years to achieve real convergence in levels of GDP
between the existing Member States and the candidate states.
Economic convergence alone (both nominal and real) will,
moreover, not be sufficient in itself; it will have to be backed
up by ongoing convergence in the social field (2).

1.7.
The EESC maintains its belief that the enlarged single
market will bring many economic benefits (3). Adjustments
made by both sides will bring about an integrated single
market. The fields of trade and marketing, in particular, will be
strengthened by the increased number of producers, suppliers
and consumers. Completely new opportunities present them-
selves for (cross-border) cooperation and other forms of
collaboration. The recruitment of suppliers, the achievement
of benefits linked to scale, closer links to customers, etc. The
simplified administrative procedures and improvements in
service brought about by the modernisation of public auth-
orities have also triggered incentives for growth and produced
improved access to law (in particular company law, taxation
law and administrative law). The establishment of an appeals
system and a trusteeship system together with the development
of a network of independent tax consultants and economic
advisers will also help to ensure that the economies of the
candidate states are successfully brought into line with the
single market.

1.8.
The enlargement of the EU will make it possible to
trigger a dynamic process of economic growth and to strength-
en the competitiveness of the EU in the global economy. It is
very likely that the overall benefits of the enlargement process
will easily outweigh its costs. If public approval
is to be
secured, however, the way in which both the benefits and
costs of enlargement are distributed is also of decisive import-
ance. The impact of enlargement may differ tremendously as

(2) High-level Group on industrial relations and change in the EU.

Draft Interim Report, 16 November 2001.

(3) See ‘The impact of the enlargement of the European Union on the
Single Market (SMO)’ opinion of the EESC, OJ C 329, 17.11.1999.

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regards the various sectors of the economy, the various regions
and also as regards timing. The EESC welcomes the efforts
made by the Commission to inform people more clearly of the
opportunities linked to enlargement. At the same time, it is,
however, of decisive importance to the success of enlargement
that the attendant risks and challenges be addressed openly.
This is the only way to help cope with these issues.

2. The existing body of EU law (‘acquis’)

2.1.
As part of the enlargement process, the candidate
states have to incorporate into their own national law the
existing body of EU law and consequently also apply and
enforce the requisite provisions. This represents a major
challenge for the candidate states. A number of candidate
states have expressed reservations over this issue in the
negotiations, not least because of the high cost to be met.

The existence of modern state administrations and
2.2.
modern states based on the rule of law, backed up by
appropriate service orientation, is clearly extremely beneficial,
both in respect of the transposition and implementation of the
existing body of EU law. The EESC therefore agrees with the
Commission that it is of the utmost importance to strengthen
the administrative capacities and the judiciaries in the candidate
states in the run up to their accession to the EU, in order to
ensure that EU legal provisions do not exist merely on paper
but are also implemented and observed in practice.

2.3. With this aim in view it is essential to establish the
necessary administrative and legal structures and capacities
and to introduce appropriate measures in the field of qualifi-
cations and remunerations. Appropriate information bodies
and initial assistance bodies should also be set up to enable
people to find out about and make use of the existing legal
provisions, standards, complaints procedures and possibilities
of bringing legal action. The EESC welcomes the action plans
and programmes which have been introduced to strengthen
the administrative and judicial capacities of the candidate
states.

2.4.
In this context, the question of the increase in the
number of official languages in the future EU has scarcely been
discussed. The EESC draws attention to the fact that this
increase will place an additional burden on the EU in terms of
funding and human resources, for which provision will have
to be made. The EESC urges the Council to set out its views on
this issue.

In view of technical, economic or political reservations,
2.5.
both sides have asked for transitional periods to be introduced
in sensitive areas of EU legislation prior to the complete
adoption of the existing body of EU legislation. The EESC is
confident that the candidate states will be able to overcome
the other challenges arising in the course of the accession
process,
just as they have managed to carry out the earlier
transformation of their economies. The EESC would, at the
same time, express its understanding over the fact that in many
fields the switchover to the single market rules will require a
certain amount of time, which will extend beyond the date of
accession.

2.6.
This being the case, the practice of granting transitional
periods provides a helpful alternative which benefits both the
present and the future member states. As they have the effect
of restricting the single market, however, such transitional
measures should be confined to what is required to implement
an adjustment process which is socially and economically
acceptable; they should also continue to be of the shortest
possible duration. In the period of application of the tran-
sitional measures,
targeted measures should be taken or
supported to ensure that the necessary adjustments can be
carried out. Sensitive areas of the single market in this respect
include:

2.6.1.
Free movement of capital: transitional periods have
been granted in the case of all candidate states with regard to
the purchase of agricultural land by foreigners. Agreement was
also reached on the granting of a five-year transitional period
in respect of the purchase of second residences. Transitional
periods are important in both of these areas as they are
sensitive issues for many of the candidate states and in all
probability prices will rise anyway in these fields in the
candidate states after a certain delay.

2.6.2.
Free movement of workers: views differ very con-
siderably on this issue. The EESC has already noted that
measures in respect of timing and area and sectoral provisions
have already been introduced to address the expected move-
ments of the migrants and the EESC has further highlighted
the need for regional and sectoral distinctions to be introduced
in respect of the transitional measures for limiting the free
movement of workers and freedom to provide services and for
these measures to be regularly reviewed and administered in a
flexible way (1). In its common position the EU has taken
account of the fact that free movement of workers is a highly
sensitive issue and it has already reached agreement on
transitional provisions with almost all of the candidate states.
The EESC welcomes this and expresses its hope that in the
course of
these transitional periods every effort will be
made to press ahead with the introduction of the necessary
preparatory measures in order to ensure that the EU provides
an effective common labour market for all future EU Member
States.

2.6.3. Mutual recognition of vocational qualifications and
the removal of discrimination and restrictions with regard to
access to careers: these fields continue to pose a challenge.
The coordination of social security systems, together with
coordination and cooperation in the field of income tax, are
also key issues in this context.

2.6.4.
Frontier checks on individuals: these checks will be
retained for a certain period following accession. If they are to
secure the removal of the internal borders the candidate states
will have to fulfil all the prerequisites for the entry into
force of the existing Schengen provisions. These prerequisites
in particular, the introduction of an operational
include,
national section of the Schengen Information System (SIS).
Full implementation of the Schengen provisions by the date of
accession to the EU will, in all probability, not yet be possible

(1) See ‘Freedom of movement for workers in the single market’,

opinion of the EESC, OJ C 155, 29.5.2001.

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for technical and operational reasons. Bearing in mind the
timetable for the introduction of
the second generation
Schengen Information System (SIS II) which, on current
estimates is not likely to be operational before the end of 2005
at the earliest, it will probably not be possible for a decision to
be taken before this time on the removal of checks at the
internal borders. Time will also be required to carry out the
Schengen evaluation process. The continued application of
border controls is however necessary in view of the transitional
provisions relating to tobacco tax (see point 3.3.2.5 below).

2.6.5.

F r e e m o v e m e n t o f g o o d s

2.6.5.1.
Turning to the field of agriculture and the issues in
this sector which are of relevance to the internal market, a
series of transitional periods have been requested by the
candidate states in respect of the EU’s planned health and
veterinary provisions; some of
these requests have been
accepted on a temporary basis. Almost all of the candidate
states have requested transitional periods representing, on
average, three years with effect from their date of accession, in
order to enable them to convert their food-processing plants.
If the transitional periods are accepted, the marketing of
products produced by these plants in the transitional period
will, however, have to be confined to the respective candidate
states. Such products should not be marketed throughout the
EU at this time.

Although it is at present not possible to carry out
2.6.5.2.
a detailed survey, since this chapter is, in part, still being
negotiated on a bilateral basis, the transitional periods granted
in respect of processed and unprocessed agricultural products
could well jeopardise the free movement of goods. It will be
necessary to carry out checks on goods at or beyond national
frontiers in order to monitor compliance with these provisions.
There is a risk that these transitional provisions and the border
inspections made necessary because of these provisions will
trigger delays at the borders between the old and the new
member states. Whilst recognising the need for border inspec-
tions, the EESC nonetheless points out that considerable delays
may also entail corresponding economic costs.

2.6.5.3.
In this context the EESC calls for all the necessary
measures to be taken in order to comply with the high
standards of food safety in the EU. The following issues have
yet to be resolved: assurances that adequate checks are carried
out at the external borders; compliance with the EU’s strict
health-protection provisions with regard to BSE; safeguarding
the quality of drinking water; bringing food processing plants
into line with EU standards; and observance of the EU’s animal
welfare provisions. It will only be possible to set up inspection
posts to carry out veterinary and other checks at the external
borders of the EU on condition that the requisite buildings,
equipment and personnel are available.

Certification systems: in this field the EESC sup-
2.6.5.4.
ports the proposal put
forward by the European Com-
mission (1) that the candidate states should become active, full

members of CEN and CENELEC by December 2003 at the
latest. The aim is to introduce a uniform system for certification
in order to simplify procedures and avoid the additional
expenditure caused by the use of different systems; such
additional costs would represent an insuperable burden,
particularly for SMEs.

2.6.6.
Freedom to provide services: the majority of the
candidate states have been promised transitional periods in
respect of financial services, relating to: restrictions applying
in the case of small cooperative banks; low minimum capital-
cover requirements in the case of cooperative banks, pensions
funds, etc. The deadline for removing restrictions on the
movement of capital between EU Member States and third
countries was set at 31 December 1999. Prior to this target
date, all restrictions on the movement of capital between the
new member states and third countries were the subject of
long-term derogations.

In order to ensure that the future single internal market
2.7.
operates effectively, it will be necessary to step up frontier
checks. Uniform standards will have to be applied throughout
the EU when carrying out these checks. With this aim in view,
measures will need to be taken in the following fields:
training; remuneration; application of the common rules; and
monitoring compliance with these rules.

2.8.
Implementation of the existing body of EU law in the
enlarged Union represents a historic challenge. Even in the EU-
15 and ten years after the completion of the single market,
major sections of the provisions have yet to be implemented.
Against this background, further development in accordance
with the objectives of the Lisbon process, of single market law
which has already been harmonised or standardised will
constitute a special challenge. It is of critical importance to the
future of the EU and the Union’s objective of improving living
and working conditions, that Community law and policies are
adjusted to bring them into line with new developments,
thereby ensuring the ongoing modernisation of the existing
body of EU law. We must ensure this process does not grind
to a halt.

2.9.
The EESC shares the Commission’s view that the
administrative capacities of the new Member States will have
to be regularly adjusted — even after the states concerned have
joined the EU — to keep pace with the changing requirements
of Community law. In order to enable the benefits of the
transition from a closed system to a system based on a social
market economy to be fully utilised, ongoing improvements
will have to be made to the legal framework in respect of
competition law, consumer protection law, labour law, social
law, etc. The establishment of an adequate administrative
capacity is therefore not a process which comes to an end
once the candidate states have actually joined the EU. The
EESC welcomes the Commission’s plan to provide a special
transitional facility to assist the new Member States also after
they have joined the EU (2).

( 1) European Commission: 2002 Review of

the internal market

strategy (COM(2002) 171 final).

(2) See COM(2002) 700 final — Towards the enlarged Union —
Strategy paper and report of the European Commission on the
progress towards accession by each of the candidate countries.

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2.10.
Further development of the existing body of EU law
is also influenced by the nature of the decision-making process.
The current rather complicated form of decision-making which
is based on, above all, the new provisions for weighted voting
in the Council drawn up at the Nice Council in 2000, should
be analysed to determine the scope for improving transparency
and efficiency. Many surveys have shown that public dissatis-
faction with the EU is very often attributed to the lack of
transparency in the decision-making process. There is a danger
that the problem of political processes which are perceived as
opaque will be aggravated when EU membership is extended
to comprise 27 Member States. Further improvements in this
field would be beneficial with a view to promoting a citizen’s
Europe.

2.11. Modernisation of the existing body of EU law is being
promoted above all by the alignment of economic and social
criteria in the Member States and the candidate states. The
sooner economic and social discrepancies are removed, the
more readily it will be possible to achieve uniform further
development and progress in the EU. All EU policies, including
the Structural Funds (1) have to make their contribution
towards removing, as quickly as possible, existing discrepancies
between the old and the new regions of the EU and facilitating
coherent economic and social development in the new EU as
a whole, in line with the goals set out at the Lisbon European
Summit of making the EU, in the next decade, into the most
competitive and dynamic knowledge-based economy in the
world, whilst taking account of the Union’s fundamental
principles of ensuring social and territorial cohesion. This is
the way to create the conditions necessary for the development
of the EU in economic terms, in terms of the single market
and in the fields of social policy, consumer protection and
environmental conservation, which are now backing up the
policy on the single market (2).

3. The development of selected areas, opportunities and

challenges

The core objectives of the single market policy such as:
3.1.
the achievement of a proper level of harmonisation; mutual
recognition of legal provisions; the application, observance
and implementation of EU law; problem-solving and the
establishment of standards, are now backed up by social
policy, consumer protection and environmental conservation
measures. The interaction of the euro and EU-enlargement are
also giving a new impetus to integration (2). A number of fields
relating to the way in which the benefits of EU enlargement
are distributed and therefore of importance to the success of
the single market are addressed in the paragraphs below. The
enlarged single market must bring tangible benefits to the
public, both in their capacity as consumers and in their role of
employees or entrepreneurs.

3.2.

Structural change and economic development

3.2.1.
In the course of the transformation process, the
economies of the candidate states are undergoing considerable
upheaval. In addition to the change-over from a controlled
economy to a market economy, the structure of the economy
measured by the relative importance of the agriculture, indus-
try and service sectors, has to be modernised. Many old heavy
industries and mono-industries, particularly in the coal and
steel sectors, have shown themselves to be uncompetitive in
the course of the transformation process. This is the case, in
particular, with the steel
the Czech
Republic, Slovakia and Hungary. In many cases the steel
industry is concentrated in individual regions; this has had
tremendous economic and social consequences in the course
of the restructuring process, and these consequences, too, have
been felt most strongly in these same regions.

industry in Poland,

Some enterprises in the existing EU Member States
3.2.2.
are also being exposed to a higher level of pressure of
competition as a result of the enlargement of the single market.
The single market, which is one of the key objectives of the
is facing a considerable challenge as a result of these
EU,
developments. All available instruments will have to be used
in order to cap the economic potential and to bolster economic
growth. The EU must not leave this potential unused; it needs
this potential if it intends to exploit the advantages of the
single market and to become the most competitive economic
area.

Economic policy measures and a targeted macro-
3.2.3.
economic policy (insofar as such a policy is possible at EU
level) therefore need to be directed towards helping to exploit
the economic potential of the EU — some of which has
remained untapped — and thereby also taking advantage of
the opportunities presented by the forthcoming enlargement
of the single market. The economic policy measures involved
here cover a range of fields, namely business-promotion, the
promotion of entrepreneurship, support for SMEs, compe-
tition policy, technology policy, particularly in the field of
information and communication technology (ICT), measures
to promote a dynamic labour-market policy, employment
policy and structural policy.

3.2.4.
It is particularly important that specific measures be
taken to prepare workers who have lost their jobs as a result
of restructuring to take up new careers. Active participation in
EU programmes, particularly re-training programmes, pro-
grammes for providing qualifications and life-long learning
programmes, are vital pre-requisites for tackling the problem
of structural change and achieving the objectives set out at the
Lisbon European Council. The adoption of this course of
impact of
action would also help to minimise the social
restructuring.

( 1) See ‘Strategy for economic and social cohesion in the EU’, opinion

of the EESC, OJ C 241, 7.10.2002.

( 2) European Commission: 2002 Review of

the internal market

strategy (COM(2002) 171 final).

Border regions are facing particular challenges. The
3.2.5.
EESC therefore welcomes the EU measures for assisting border
regions which are designed to underpin structural change in

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these areas through the development of infrastructure, targeted
skills-training measures for workers and measures to help
SMEs (1). Neighbouring regions and the social partners have
also already taken measures to promote cross-border cooper-
ation. These measures should be extended and supported.

however, in many cases achieved at the cost of making workers
redundant and increasing the level of unemployment, a
situation which now has to be tackled using macro-economic
resources and financial support from public funds.

The

introduction of

cross-border policies

for
3.2.6.
developing border regions and exploiting experience gained in
EU-15 would appear to be a particularly positive step in this
context. The experience concerned includes,
for example,
cooperation between regions, along the lines of that adopted
in the Saar-Lor Lux Region in which permanent structures for
regional cooperation and development have been set up, with
the involvement of all the relevant players. A cross-border
economic and social committee has also been set up in this
region.

3.2.7. A g r i c u l t u r e

3.2.7.1.
One of the most sensitive areas in connection with
enlargement is that of agriculture. In some candidate states
agriculture accounts for a far higher percentage of aggregate
economic activity than is the case in EU-15. There are also
tremendous discrepancies between the agricultural sectors of
the EU and the candidate states, e.g. in connection with quality
standards in the dairy industry, an issue which has implications
in the fields of goods transport and food quality.

3.2.7.2.
There are considerable differences of opinion over
the procedures proposed by the European Commission with
regard to the application of the Common Agricultural Policy
(CAP) in the candidate states. Against this background, the
reform proposals put forward by the Commission in July 2002
are of significant importance to future developments. The
proposed changes to the CAP, which involve a switch from
aid geared to levels of production towards an ecological
approach involving the promotion of quality, and conse-
quently smaller structures, the provision of guaranteed income
payments for farmers and, above all,
the move towards
providing support for structural change and rural development
are all steps in the right direction.

3.3. Modernisation of markets and improved general conditions

for enterprises

3.3.1.

P r i v a t i s a t i o n a n d l i b e r a l i s a t i o n

3.3.1.1.
Privatisations were an important tool in the trans-
formation process. In cases where privatisations resulted in
foreign enterprises investing in key economic sectors in the
candidate states, thereby bringing both capital and expertise
into these states,
these measures helped to bring about
rapid economic development. The success of these privatised
enterprises, in particular the increase in their productivity, was,

( 1) See ‘Freedom of movement for workers in the single market’,

opinion of the EESC, OJ C 155, 29.5.2001.

In many cases privatisations were carried out very
3.3.1.2.
legal and
quickly and without having the requisite general
institutional conditions in place (2). These measures have had
undesirable side effects, particularly in the field of services of
general interest and related infrastructure. Services of general
interest do not simply represent a key factor in bringing about
an increase in the quality of life of the general public; they are
also a critical
factor in the location of investments and
hence also of decisive importance to the development and
competitiveness of whole regions. Investors prefer regions
which offer a balanced supply of services of general interest.

3.3.1.3.
Infrastructures are a decisive factor both with
regard to the catching-up process and with regard to ensuring
this observation applies in
cohesion in the enlarged EU;
particular in the case of peripheral areas which suffer from
infrastructure weaknesses in the candidate states. The regions,
cities and municipalities of eastern and central Europe face a
most severe dilemma in reconciling, on the one hand, obli-
gations in respect of the public economic interest and, on the
other hand, the requirements attendant upon new forms of
competition. They also have to contend with budgetary
shortages, with the result that there is a trend, in many cases,
to outsource services and deregulate these sectors.

This development coincides with political endeav-
3.3.1.4.
ours in the EU to open up services of general
interest to
competition and to deregulate traditional areas of infrastruc-
ture, such as transport, energy, telecommunications, watersup-
ply, waste disposal and environmental services, in order to
bring about the single market and to improve the benefits for
consumers. There is, in this context, frequently a tendency to
overlook the fact that there are certain features of services of
general interest which render them unsuitable as services to be
provided solely on the basis of market criteria. There is rather
a need to spell out clear general conditions (public interest
commitments and principles governing the operation of these
services) in order to ensure that such services are provided in
the requisite quantity, quality and the requisite continuity.

3.3.1.5. With this aim in view, the EESC ‘is in favour
of achieving a balance between the general
interest and
competition’ (3). As private suppliers are primarily interested
in securing an appropriate return on their investment, rather
than in bringing about the development of regions,
the
requisite conditions for the development of regions need to be
set out in the form of general conditions or rules, in order to
enable all suppliers, be they public or private suppliers, to
operate under the same conditions within this framework.

(2) See John Nellis:

‘Time to rethink Privatisation in Transition
Economies’, World Bank, 1999 and Joseph Stieglitz: ‘Die Schatten
der Globalisierung’

(3) See ‘Services of general interest’, opinion of the EESC, OJ C 241,

7.10.2002.

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3.3.1.6.
The whole of the general interest services sector in
the EU is undergoing a constant process of adjustment and
modernisation. With a view to maintaining security of supply
in this field and safeguarding the public interest, Member
States have set up regulatory authorities which, acting under
accompanying legislation, are to back up the drive to achieve
liberalisation, remove monopolies and denationalise services.
Liberalisation has far-reaching consequences with regard to
benefits for the consumer, the availability of price and services
and accounting procedures.

3.3.1.7.
The candidate states have yet to carry out some of
these liberalisation measures. Because of outdated generating
facilities and pricing systems geared to energy-intensive indus-
trial users of energy, the candidate states continue to be at a
disadvantage when it comes to establishing regulatory bodies
and adjusting their markets to bring them into line with the
international energy market. These states have therefore asked
for transitional periods. The progressive opening up of the
previously protected markets of the applicant states will only
bring the desired positive results if these states manage to
utilise the transitional periods in order to develop national
regulatory authorities. These authorities must be given suf-
ficient legislative, technical and financial support to enable
them to accept equal responsibility for defending the interests
of consumers, owners and staff.

3.3.2. T a x a t i o n

3.3.2.1.
Taxation systems in the EU have not yet been
brought into line with developments such as globalisation,
economic integration in the single market and the monetary
union. EU enlargement will also make new demands on the
tax systems, the first priority being the adoption of existing EU
Directives.

As is also the case in other fields, transitional
3.3.2.2.
provisions relating to taxation systems may help to cushion
obvious negative economic and social consequences for society
in the candidate states. They may likewise help to bring about
a ‘soft’
integration of the candidate states into the single
market. Extremely limited use should, however, be made
of these transitional and exceptional rules so as to avoid
exacerbating the danger of tax competition within the EU,
which would be damaging to public budgets, and to preclude
distortions in competition.

3.3.2.4.
In this context, the EESC advocates that tax systems
be developed in such a way as to overcome the existing
obstacles to the single market and prevent tax competition,
particularly in the field of corporation tax, whilst, at the same
time, providing funding required to cope with the tasks and
challenges facing the enlarged EU and to address the issue of
economic and social cohesion. These efforts could also be
continued in the course of the enlargement process. Excep-
tional rules, such as the tax treatment of multinationals
customarily applied in some states, could endanger these
efforts; such exceptional rules are also not compatible with
existing EU law and should therefore be rejected.

3.3.2.5.
A further matter of concern is the exceptional
provisions or generous transitional provisions in the field of
VAT and excise duty; in these two fields, the combination of
the geographical proximity of the countries concerned and/or
the fact that the goods in question can be readily transported
mean that a low level of taxation, compounded by low price
levels, could lead to distortions in competition and also
increase the risk of smuggling and black-market operations.
By way of example, transitional provisions were agreed with
all of the candidate states in respect of tobacco taxes. The EESC
welcomes the associated conditions to be introduced by the
candidate states with regard to checks on the tobacco sector
and the possibility for the existing EU Member States to
introduce quantitative restrictions. Whilst the border controls
which are necessary in this context in respect of passenger
traffic may have a detrimental effect on the free movement
of persons, these checks are essential
in order to prevent
smuggling.

3.3.2.6.
The Commission’s endeavours to prevent the estab-
lishment of special economic zones in the candidate states
should be supported. In this context, the EESC highlights the
example of Latvia, which has declared its readiness to seek to
comply with the existing body of EU law. Such steps will also
have to be taken in other states. The Commission will monitor
these efforts. The Commission’s activities with a view to
preventing the establishment of special economic zones are
highly conducive to the development of an enlarged single
market as this approach represents the only way to counter
the risk of distortions in competition. Rather than setting up
special economic zones, candidate states should promote
regional development by introducing appropriate measures in
the regional policy and structural policy fields.

3.3.3.

S m a l l a n d m e d i u m - s i z e d e n t e r p r i s e s

3.3.2.3.
The EESC draws attention to the fact that an
erosion of the tax base in both the candidate states and the
existing EU Member States would not be expedient, particularly
in the course of the enlargement process. It would jeopardise
the scope for action on the part of the states, which is a factor
of considerable importance, particularly in the context of such
a comprehensive reform process. This situation could also
have a damaging effect on political acceptance of EU enlarge-
ment within the current Member States.

In the future single market it is likely that large
3.3.3.1.
enterprises having a higher turnover will gain competitive
advantages. Export-orientated enterprises which, against the
background of the opening-up of the eastern European states,
have already learnt how to gear their operations to export
market conditions, have an advantage over enterprises which
have hitherto confined their operations to their national
markets.

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3.3.3.2.
The establishment of a SME structure in the
candidate states was a fundamental prerequisite for improving
the employment situation and attenuating the harmful conse-
quences of plant closures and the necessary re-structuring of
the oversized former main industries. As a result of the key
role played by SMEs, the inevitable labour-force reductions
have been offset, a fall in living standards has been prevented
and efforts to avoid social tensions have been bolstered.

3.3.3.3.
The difficult conditions under which SMEs operate
have, however, resulted in the widespread occurrence of
aspects of the black economy and precarious working con-
ditions in some SMEs. In order to bring conditions in this
sector up to the level of those applying in the EU with regard
to the business activities of SMEs and working conditions for
SME workforces, there is a need to strengthen the social
partners — both those representing employers and those
representing workers — and to introduce support measures
and aid programmes. A number of measures are required:
training and
financial support; measures in the field of
continuing training; and the establishment and simplification
of administrative structures.

There is no adequate social dialogue either at plant
3.3.3.4.
level or at supra-plant level;
industrial relations have been
placed on a wholly individual level. Trade unions, women’s
organisations and church organisations have drawn attention
to a number of problems, including the fact that commercial
employees, in particular, are experiencing a deterioration in
their working conditions (some employees, for example, have
to work up to 16 hours per day without having Sundays or
public holidays off), with the attendant adverse effects on
their family lives. The EESC expresses its concern over this
development and calls for measures to be introduced to
implement an effective social dialogue.

3.3.3.5. With particular reference to SMEs, in its opinions
from 2000 and 2002 (1) on the European Charter for Small
Enterprises the Committee has highlighted the major role they
play in the economic and social development of the applicant
countries, notably in the spheres of education and job creation.
Steps should be taken to implement in the applicant countries
the specific support measures advocated in the ten recommen-
dations of the European Charter for Small Enterprises, which
was signed by the applicant countries in their turn (Maribor,
April 2002) and, for this purpose, to encourage cooperation
between small business organisations in the applicant countries
and the present Member States.

3.3.4.
In the field of transport policy,road traffic in the EU
is a sensitive topic — especially from the citizens’ point of
view. A single internal market inevitably means increased

traffic volume. The challenges facing EU transport policy are
all the greater for a number of reasons. It has to pursue the
goal of establishing, for the necessary volume of transport,
suitable basic conditions which are also environmentally and
socially compatible and which ensure that there is a reasonable
co-existence between the different modes of transport (rail,
road, water ...). On the other hand,
it has to introduce
appropriate transport policy measures and suitable economic
incentives to prevent unnecessary transport, whilst enabling
the essential volume of transport to be carried out in the most
cost-saving way possible and with the least possible damage to
the environment. Furthermore, distortions and undesirable
developments may be brought about in this sector because of
the considerable differences in (labour) laws and economic
conditions. Cooperation with the candidate states with regard
to these issues should therefore be stepped up, even before
accession.

3.3.5.
In the field of competition policy the topic for
discussion is above all the steel industry in Poland, the Czech
Republic, Slovakia and Hungary. Steel production in central
and eastern Europe is judged to be of only limited competi-
tiveness. High state subsidies give grounds for concern with
regard to competition policy, as does disregard for environ-
mental measures, which impact upon prices. The candidate
states argue that withdrawing subsidies would cause an
enormous social problem, and that the steel is exported mainly
to Russia. The EESC recognises this argument, but would point
out that, for that very reason, restructuring of the steel industry
is necessary right up to the moment of accession to the EU. It
is important to act now, in order to avoid having to introduce
transitional periods in this area — because of the problems
unresolved by the time of accession — and to prevent the
distortions of competition that would result.

3.3.6.
In the medium term the future EU member states
will also have to address the issue of their participation in
economic and monetary union (EMU). Experience gained in
the former East Germany indicates that the prerequisites for a
successful adoption of
the euro need to be thoroughly
examined and that there should be no precipitate participation.
As a first step, the future member states could join the
exchange rate mechanism, under which the value of their
currencies would be allowed to fluctuate by approximately
15 %. In this context, the EESC would also draw attention to
its opinion on the impact of enlargement on EMU.

they do not

In fact — and even if

3.4.
immediately
recognise themselves under this title, as defined by the
Committee in its 2000 opinion (2) — the social economy
organisations (cooperatives, mutual societies, associations,
foundations, NGOs) have played a very important role in
filling the gaps left by the public authorities in assistance to
marginalised groups in society. But above all they have acted
and continue to act as a catalyst for public participation and

( 1) EESC opinions on the charter, OJ C 204, 18.7.2000, and OJ C 48,

21.2.2002.

(2) EESC opinion on the social economy, OJ C 117, 26.4.2000.

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democratisation — not always to the same degree but always
making a substantial contribution — in all the applicant states.
The Committee thinks that it would be extremely harmful
if, bearing in mind their present fragile structure and the
fragmentation and isolation of their diverse forms, the organis-
ations and enterprises of the social economy in the candidate
countries were to wither or die. This would result in enormous
social, political, financial and cultural costs which would have
to be borne not only by these countries but also by the current
Member States. The Committee therefore calls for the launch
of a ‘development
in the
present and future member states aimed at consolidating this
important force for social, economic and democratic cohesion
in an enlarged Union.

fund for the social economy’

3.5.

Enhancing people’s quality of life

3.5.1.

S o c i a l p o l i c y a n d e m p l o y m e n t

3.5.1.1.
Enlargement will only prove successful if it receives
the support of the public in both the present EU Member
States and the candidate states. A key prerequisite for success
is that enlargement should also represent a ‘social’ project.
Social policy has now become one of the policies which back
up the single market; in this context it is essential that the
candidate states set themselves the goal of introducing the
European social model, with its principles of social and
territorial cohesion, as a key feature of the transformation
process. The expected achievement of economic growth in the
candidate states must also be utilised to consolidate their social
security systems.

3.5.1.2.
The goal of full employment, as set out in the
Community decisions taken at the Lisbon European Council,
must also be rigorously pursued in all policy areas throughout
the enlarged Union.
In this connection the Committee is
pleased that the candidate countries already take part in the
appropriate EU programmes and action plans (including the
combating of poverty).

3.5.1.4.
In addition to introducing rules in respect of
migrant workers and equal treatment, the EU has also managed
to establish minimum standards in a number of key individual
fields. To quote an example, a large number of labour law
directives have been adopted covering areas ranging from
health protection, working hours, annual
leave, protective
measures to safeguard working mothers and parental leave to
technical measures to protect workers. Areas in which laws
have been harmonised will clearly need to be revised and
brought into line with new conditions, on an ongoing basis. It
will, however, also be even more necessary in future to
introduce EU provisions in additional areas, such as protection
against unfair dismissal and a number of individual aspects of
collective labour law. If the quality of the European social
model is to be sustained, this model will have to be subject to
constant development; this applies also — and indeed in
particular — to the enlarged Union.

3.5.2.

S o c i a l d i a l o g u e

3.5.2.1.
The involvement of the social partners and civil
society in all issues affecting them is a further key element of
the European social model. With this aim in view, the EESC
welcomes the fact that the Commission is consulting the social
partners and representatives of civil society in the candidate
states on a large number of issues and calls on the governments
of the candidate states to follow this example. Many govern-
ments in the candidate states still have problems with involving
the social partners and civil society organisations adequately
in the enlargement process.

It is at the same time a matter of concern that both
3.5.2.2.
employers’ organisations and bodies representing workers are
frequently established on a relatively insecure footing in the
candidate states and the bilateral social dialogue, i.e. collective
negotiations
and
employees’ organisations, is not yet sufficiently developed. It
is vital to strengthen these institutions if we are to secure a
social dialogue which operates smoothly and to implement
the Community acquis, especially in the social sector.

and agreements between employers’

3.5.1.3.
In chapter 13, relating to social policy and employ-
ment, a number of candidate states have requested transitional
periods in respect of the field of health and safety at the work
place. The EESC basically understands the need for transitional
arrangements but would point out that it advocates a restrictive
use of such arrangements, since they may give rise to
distortions in competition in the single market and would
undermine the quality of the European social model. On the
other hand, the EESC acknowledges that many SMEs would
simply be unable to afford to bring their operations into line
with the existing body of EU law. Once these states join the
EU, it is likely to be necessary for SMEs, in particular, to invest
heavily in order to meet the requirements attendant upon
compiling with the existing body of EU legislation.

3.5.2.3.
Stepping up the support provided by organisations
in the existing Member States could help to bring about an
effective social dialogue, as could the establishment of econ-
omic and social committees. Strengthening of
the social
dialogue at EU level would also be a desirable measure,
especially in the form of regular participation of the applicant
countries’ social partners from 2003 onwards in the structures
of the European Social Dialogue Committee, as provided for
by the European social partners in their work programme for
2003-2005, presented at the Social Dialogue Summit held in
Genval on 28 November 2002. In this connection it will be
important to ensure that the organisations representing SMEs
and small businesses are given their due place in these
structures.

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3.5.3.

S o c i a l s e c u r i t y s y s t e m s

3.5.3.1.
In the candidate states, the process of adopting the
existing body of EU law is overlapped by the process of
transforming the whole economic and social system, a process
which is supported by the World Bank and the IMF. These
latter bodies act on the bases of the US social model and at the
same time have a much more comprehensive remit than the
EU, whose legislation is not strongly developed in many fields.
The EU, whose Member States exhibit distinctive, if different,
social systems, attaches great value to the ‘European social
model’ and its principles of social and regional cohesion.
However, the EU is playing hardly any role in the above-
mentioned reforms because of a lack of legitimacy deriving
from treaties or laws (there is very little EU legislation covering
this field). As a result, in many areas, including the social
security field, the way has been paved for a social model that,
in the EESC’s view, cannot serve as a model for Europe (1). The
EESC recommends that more attention be paid to these
questions within the framework of the open coordination
process developed at Lisbon, in which the candidate states
have also been included since Barcelona.

3.5.3.2.
The limited legal competence of the EU means that
all the internal market effects — such as the impact on the
capital market or effects on worker mobility — deriving from
the organisation of social systems (e.g. pension schemes) are
very clearly expedited at EU level without the associated
underlying issues relating to the organisation of social systems
being subject to systematic and comprehensive debate.

3.5.4.

S e r v i c e s o f g e n e r a l i n t e r e s t

3.5.4.1.
At European level, liberalisation and deregulation
have been justified and implemented not only in the traditional
infrastructure areas such as transport, energy, telecommuni-
cations, water supply, waste disposal and environmental
services, but also in the area of social services as well as in
health and education or financial services, particularly with the
completion of the internal market.

3.5.4.2.
The candidate states still have to undergo some of
these stages of liberalisation and have requested transitional
periods. The EESC would point out that the steps towards
opening up these states’ hitherto protected markets will only
have the positive results hoped for if equal account is taken of
the interests of consumers, owners and employees and the
specific features of the services involved.

( 1) See ‘Employment, Economic Reform and Social Cohesion —
Towards a Europe of Innovation and Knowledge’; opinion of the
EESC, OJ C 117, 26.4.2000.

3.5.4.3.
These services show features which make their
adaptation to exclusively market criteria unsuitable. It must
therefore be specified in which sectors and to what extent
competition and internal market rules are to actually apply to
services of general interest. Care must be taken here to see that
the services involved have a very considerable impact on
people’s quality of life and social security.
It is therefore
important to know whether, to what extent and in what
capacity people have access to such services.

In addition, it is essential to prevent the emergence
3.5.4.4.
of new monopolies/oligopolies as well as out-and-out competi-
tive dumping.
Instead Europe needs fair rules and non-
discriminatory treatment of public-sector, public-service and
municipal corporations.

3.5.5.

E n v i r o n m e n t a l i s s u e s

3.5.5.1.
Large areas of environmental law are regulated for
the whole Community, either through the establishment of
general environmental requirements or environmental quality
standards (ground level concentration limits), production-
related measures (emission limits) or through general pro-
cedural rules. Community law does, in principle, provide for a
large measure of flexibility in environmental policy, which is,
in the final analysis, designed to take account of the goals of
the economic and social development of the Community and
the balanced development of its regions. Although this allows
considerable scope for granting exemptions to individual
Member States in specific plans for directives, it should not be
forgotten that such possibilities could all too easily be over-
used in the enlarged union.

3.5.5.2.
In view of the environmental damage which is
often found in the candidate states and still has to be overcome,
extensive demands have been made for transitional periods in
order to bring in the existing acquis. The EESC would point out
here that an intact environment represents one of the most
precious assets for preserving and developing the quality of
life, and every effort must be made to repair environmental
damage, remove risks to the environment, such as those posed
by nuclear power stations, and prevent such damage and risks
from occurring in the future. Large-scale exemptions and
transitional measures would not only lead to distortions of
competition but would also have a detrimental impact on the
future development of
the environment and would pose
difficulties for a continuous development of Community
environmental law according to the principle of sustainability.

3.5.6.
In the field of consumer protection too, considerable
improvements have been achieved for Europe’s consumers
over the past few decades. In addition to central regulations in
the areas of consumer safety and consumer health, major
progress has been made above all in protecting consumers’
economic interests. A key marker here was the Product

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Liability Directive (1). Its need of amendment was well-known
and its scope was expanded to include agricultural products,
not least as a result of the BSE crisis. Care should be taken to
see that such improvements in consumer protection can still
be decided in an enlarged EU. Appropriate pressure by
consumers can also help ensure that development continues.

3.6.

Preparations for accession

3.6.1.
In addition to the inclusion of the candidate states in
EU programmes, which has already begun, there are also
specific programmes for preparing these states for accession.
Particularly worthy of mention here is the twinning pro-
gramme to prepare administrative authorities for their future
tasks. The demand for this programme will continue even after
accession, in accordance with the need mentioned above for
the further development and adaptation of the administrative
authorities even after accession.

3.6.2.
It is unfortunate in this context that the implemen-
tation of the programmes is often so complicated that potential
applicants are scared off or cannot work out how to take part.
Thus the Sapard programme for the conversion of agriculture

( 1) Directive 85/374/EEC, as amended by the Directive 1999/34/EC,

OJ L 283, 6.11.1999.

Brussels, 12 December 2002.

has not yet received any applications in a number of candidate
states, even though agriculture is undoubtedly one of the
sectors where there is most need for action. The EESC would
refer here to its proposals on the continuation and reform of
structural policy and the Structural Funds (2).

3.6.3.
The EESC has already made a number of proposals
in its first opinion on this topic (3) in order not only to advance
the candidate states to the internal market, but also to give
them the possibility of preparing themselves for future internal
market developments.
to the
proposal to set up single market coordination centres and
contact points for businesses and the general public.

It would particularly refer

3.6.4.
The EESC itself regularly carries out hearings in the
candidate states, to which the relevant economic and social
groups are invited. In addition, with the PRISM database it has
created a tool containing essential initiatives of relevance to
the single market, which is available as a source of information
on the EESC website.

(2) See ‘The EU’s economic and social cohesion strategy’, opinion of
the EESC, OJ C 241, 7.10.2002; ‘The future of cohesion policy’,
opinion of the EESC, OJ C 241, 7.10.2002.

(3) See ‘The impact of the enlargement of the European Union on the
single market’, opinion of the EESC, OJ C 329, 17.11.1999.

The President

of the European Economic and Social Committee

Roger BRIESCH