EUROPEAN UNION WORLD

The European Union Explained

The EU and the rest of Europe

A most impressive aspect of the European Union project has been its ability to develop and expand from a small group of relatively similar states in Western Europe into a European Union of much greater width and depth. Within this long process of enlargement, it is the expansion into Central and Eastern Europe that has, apart from de Gaulle’s reaction to the British application, been the most contentious. While member states generally agreed that Eastern enlargement was to be welcomed, to extend the area of prosperity and security, there have also been greatly varying degrees of enthusiasm, to the point where discussion of ‘enlargement fatigue’ became not uncommon in the old member states. Certainly, there have been problems on the way, but enlargement can be seen as an essential part of the EU and its continued development, not least in its dealings with those who remain outside; and the treaty still affirms that membership is open to any European state that respects ‘the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law’.

Enlargement to almost all of Western Europe

There is a routine for the process of enlargement. When an application is received, the Council asks the Commission for its ‘Opinion’, on the basis of which the Council may, unanimously, approve a mandate for negotiations. The Commission negotiates, supervised by the Council; and an eventual treaty of accession has to be adopted by unanimity in the Council and with the assent of the Parliament, followed by ratification in all the member states.

Membership can be preceded by a form of association. The original example was the Treaty of Association between Greece and the Community in 1962, which provided for the removal of trade barriers over a transitional period, various forms of cooperation, and a Council of Association. It also envisaged eventual membership; and after various vicissitudes, Greece did indeed become a member in 1981.

Portugal and Spain were not eligible for association in the 1960s. Their regimes were incompatible with the Community, for which only democratic countries were suitable partners; and Portugal had already in 1960 become a founder member of the European Free Trade Association (EFTA), which Britain had promoted in reaction to the establishment of the EEC and which, being confined to a purely trading relationship, was not so concerned about the political complexion of its members. So when democracy replaced dictatorship in the 1970s, both Iberian countries negotiated entry to the Community without any prior form of association. This was one reason why the negotiations were protracted, with entry achieved only in 1986. Protectionist resistance, from French farmers in particular, was, however, more significant.

The path to membership was different for the more north transfer of powers ow1135erly members of EFTA. The British, Danes, Norwegians, Swedes, and Swiss had eschewed the political implications of Community membership; and the Austrians were precluded by their peace treaty. Britain, Denmark, and Ireland joined in 1973 without having been associated in any way. Bilateral free trade agreements were at the same time concluded between the Community and each of the other EFTA states, which by then included Iceland; and they were later signed with Finland, which joined in 1986, and Liechtenstein, in 1991.

As soon as the Soviet constraint was removed in 1989, Austria applied for EC membership. Finland, Norway, Sweden, and Switzerland were not far behind. Delors, hoping to delay such enlargement lest it dilute the Community, devised a proposal for a European Economic Area (EEA) to include the EFTA countries with the EC in an extended single market. But the governments of those five did not want to be excluded from decision-taking in the Community, so they all applied for membership, which Austria, Finland, and Sweden achieved in 1995, after a short negotiation facilitated by their existing free trade relationship. Norwegians rejected accession in their referendum and Swiss voters refused to accept even the EEA. So Switzerland continues with its bilateral free trade agreement and only a vestigial EEA remains, associating Norway, Iceland, and Liechtenstein with the Union.

Enlargement to the East

Throughout the Cold War, relations were cool between the EC and the Soviet Union. The Soviet Union refused to accord the Community legal recognition, seeing it as strengthening the ‘capitalist camp’; and the Community refused to negotiate with Comecon, the economic organization dominated by the Soviet Union. Following 1989, and the dissolution of the Soviet bloc, the Central and East European countries turned towards the Community, which they saw as a bastion of prosperity, democracy, and protection from a chaotic (and collapsing) Soviet Union. They naturally envisaged membership.

The simplest case was the German Democratic Republic, as the Soviet-controlled part of Germany had called itself. The GDR became part of the Federal Republic of Germany in 1990; and the Community made the necessary technical adjustments at speed so that the enlarged Germany could assume the German membership without delay.

The Berlin Wall comes down

For the other countries of Central and Eastern Europe, extensive aid and development packages were put together under the Commission’s leadership. Projects such as PHARE sought to provide assistance with economic and political restructuring for the emergent democracies, spending roughly €600 million per year between 1990 and 2003, when it was wound up. However, such assistance, while welcome, was seen by many in the region as a diversion from membership. Indeed, such a view was an accurate reflection of the ambivalence felt by many of the Union’s members about enlargement.

While publicly proclaiming the historic mission of the Union to reunite Europe peacefully, many politicians were concerned about the admission of a large number of relatively poor, relatively small, and relatively unstable new members, whose populations might move en masse to the West to find employment.

It was only in 1993, at the Copenhagen European Council, that the Union agreed the principle of offering full membership to those who wanted it. However, the Union also agreed for the first time to expand on the provisions of the treaty and laid transfer of powers. Despite this laying out of the threshold for membership, and the development of extensive programmes of assistance to the states of Central and Eastern Europe in order to help meet them, it was only after the conclusion of the Amsterdam Treaty in 1997 that things really started to move. In 1998, the Union judged that a first wave of five had made the necessary progress, so negotiations began in 1998 with the Czech Republic, Estonia, Hungary, Poland, and Slovenia, as well as Cyprus, which had also applied to join; and, in 2000, also with a second wave comprising Bulgaria, Latvia, Lithuania, Romania, and Slovakia, as well as Malta. While the Union had indicated that each individual accession negotiation would proceed at its own speed, it was agreed at the 2003 Copenhagen European Council that all save Bulgaria and Romania would be able to join in May 2004. These two were able to become members in 2007.

The process of enlargement to the East was very protracted, for a number of reasons. On the part of the new member states, the adjustments required were very substantial, especially within the context of emerging from Communist, planned economy systems.

Many states simply lacked the institutions, resources, or experience necessary to implement fundamental changes in the operation of many areas of public policy and decision-making. On the part of the existing member states, we have already mentioned the fears about the increased heterogeneity of the Union and implications of free movement and of the state of EU policies. This last point was to take up much of the Union’s time in the late 1990s, as it struggled to reform CAP and cohesion policies to cope with the imminent arrival of a large number of poor states with significant agricultural sectors. Seen broadly, the solution that was found was to reform the policies by changing the types of support provided, but also to limit the amount that new states could claim in any case. Such an apparently unfair approach to new members has been a consistent feature of all previous enlargements, as existing members seek to protect their interests while they can and while an applicant state has little leverage to fight it. This was also evident with the discussions about institutional reform that culminated in the Nice Treaty, which a number of member states found unsatisfactory enough to call for the constitutional Convention.

For all of this concern, perhaps the most remarkable feature of the post-enlargement EU is how unproblematic it has been to date. Despite the failure to replace the Nice settlement with the Constitutional Treaty, the Union’s decision-making bodies have functioned without undue problems arising from the enlargement and the gridlock that some had predicted in the 1990s has not come to pass. Indeed, when we consider the most obvious crises within the Union, these have been more about old member states than new ones: the French and Dutch ‘no’ votes on the Constitutional Treaty; the Anglo-French split over the Iraq War and its aftermath; Greece’s membership of the euro. Partly this has been because the new members have kept a low profile as they learn the ropes of how to work within the Union, with Poland something of an exception; but it is also partly driven by the depth of structural adjustment that these states have made to become members: several of them have been more compliant with the requirements of membership than those they have joined.

South-Eastern Europe

Before it disintegrated, the former Yugoslavia had been closer to the Community than any other Central or East European state. Then came the disintegration and the wars. The United States initially wanted the Europeans to deal with the problems. Jacques Poos, Luxembourg’s Foreign Minister and President-in-Office of the Council in the first half of 1991, famously said, ‘This is the hour of Europe.’ Slovenia secured independence without much fighting, but bitter wars ensued in Croatia, Bosnia, and later in Kosovo, and in all three cases the Union failed completely to match Poos’s claim.

Instead, it was the US and NATO that were the main actors in securing a durable peace settlement in the region, the EU being relegated to providing humanitarian relief. The key consequence of this for the Union was to stimulate a complete review of the Common Foreign and Security Policy, most notably with the creation of hard military capabilities in order to secure the so-called Petersberg tasks of humanitarian relief, peacekeeping, and crisis management. It also helped to make the Union consider how its various external policies linked up together, most obviously seen in the creation of the High Representative to give a single face to the EU’s work. As far as the Balkans were concerned, the result of the EU’s initial failure was a return to the drawing board and the production of a Stability Pact for South-East Europe. This overarching set of policies, designed to strengthen democracy, human rights, and economic reform, was later followed by Stability and Association Agreements between the Union and each of the West Balkan states. This is backed by the Union’s Instrument for Pre-Accession Assistance, which provides some €500 million per year for the West Balkans. With the slow stabilization of the region, the Union has been able to offer membership to Croatia; full candidate status to Macedonia, Montenegro, and Serbia; and a provisional status to the others with Stability and Association Agreements, thus providing a strong incentive for local politicians to follow the example of the other Central and East Europeans.

Russia and the CIS

The three Baltic republics of the former Soviet Union, Estonia, Latvia, and Lithuania, declined to join Russia in the successor Commonwealth of Independent States (CIS) and became EU members in 2004. Among the states that stayed with the CIS, six can claim to be European: Armenia, Belarus, Georgia, Moldova, Ukraine, and Russia itself. They could therefore, if they come to fulfill the conditions of stable democracy and competitive market economy, apply for membership of the Union.

As the EU has enlarged itself to the borders of Russia and Ukraine, the question of enlargement to CIS states has been raised. The size of Russia, however, combined with the much greater economic and political disparities with the EU than those found in Central and Eastern Europe. The policy has therefore been to develop closer bilateral and multilateral relations rather than to envisage membership. The other states too face great difficulties. But although Ukraine faces major problems in becoming a stable democracy, the desire for membership is not, in the long term, unrealistic.

The EU has, however, long been eager to help with the transition to democracy and free-market economics throughout the CIS. From 1991 until 2007, the Union operated a very extensive programme of assistance known as Technical Assistance to the Commonwealth of Independent States (TACIS).

With a budget of around €500 million a year, TACIS concentrated on such things as enterprise restructuring and development, administrative reform, social services, education, and, as the biggest item, nuclear safety, which accounts for a large part of the regional programmes. As will be seen later, TACIS has been superseded by the European Neighborhood Policy. The Union’s relationship with Russia remains an ambiguous one. While the military rivalry of the Cold War has largely gone, the uncertain nature of Russian democracy under Vladimir Putin in the new century has created new points of tension. As Russia’s military might has faded and the shift to free-market economics has not yet been as successful as hoped, so the Russian government has started to use its massive natural energy exports to Europe as a new way of being a player on the international scene. The Putin era has seen repeated instances of state-controlled gas and oil companies using their size and privileged relationship with the Kremlin to gain increasingly dominant positions within EU energy markets, helped by the EU’s own energy liberalization agenda. While this dominance is conditioned by the fact that Russian companies are now dependent upon European markets for much of their profits, until there is more confidence in the political and legal systems in Russia, the Union is not likely to seek to develop its relationship beyond the current Partnership and Cooperation Agreement, notwithstanding Russia’s 2012 accession to the WTO.

Turkey

We cannot complete this chapter without reference to Turkey. If Russia is a problematic partner for the EU, then Turkey has been more like a thorn in its side, because it has so openly and heartily wished to become a member of the Union for such a long time.

Turkey concluded a Treaty of Association with the EEC in 1964, which was like that of Greece, save that the Community’s doubts about Turkey were reflected in a transition period of 22 years and no clear commitment to membership. Turkey lodged its application for membership in 1987, but it was not until 1999 that the Union recognized it as a candidate, and negotiations began only in 2005, with accession not expected for many years yet.

The EU in the world

Having shown how ‘federal institutions can unite highly developed states’, the Community might serve as an example of how ‘to create a more prosperous and peaceful world’. Such was the hope that Jean Monnet expressed in 1954 to the students of Columbia University in New York. The EU has been concerned, like others, to look after its own interests, even if it is often hard to reach agreement on what these are. But Europeans have become more aware than most others that these do include the creation of a prosperous and peaceful world. How do its actions, as distinct from its example as a region of peace and welfare, contribute to that end?

The Community as a great trading power

The United States sponsored the uniting of Europe, from Marshall Aid to the birth and early development of the Community. Monnet reciprocated with the idea of an increasingly equal EC–US partnership. Soon after the EEC was founded with its common external tariff, the US responded by initiating Round of trade liberalization in the GATT; and this led in 1967, after five years of laborious negotiations, to the agreement to cut tariffs by one-third.

That would have been out of the question had the Community not become, with its common tariff as an instrument of external policy, a trading partner on level terms with the US. As an observer in Washington put it, the EC was ‘now the most important member of GATT’, and the key to further efforts to liberalize trade. So it indeed became in later rounds of GATT negotiations, as the creative American impulse of the post-war period declined. The Community played the leading part in the Uruguay Round, concluded in 1994. With tariffs on most manufactures already low, the focus moved to non-tariff barriers where the single market programme gave the Community a unique experience in techniques of liberalization. Its experience was also relevant to the replacement of the GATT by the World Trade Organization, with its wider scope and greater powers for resolving disputes: a step, perhaps, towards validating the suggestion that the EC’s ‘example of effective international lawmaking’ might at some stage be ‘replicated at global level’.

Of course the Community’s trade relations have engendered the normal clash of interests, or at least of what participants suppose to be their interests, with agriculture the prime bone of contention. The protectionist common agricultural policy damaged trading partners such as Australia, Canada, New Zealand, and the US. Following UK accession, this was particularly harmful to the first three, a blow that could have been avoided had Britain not failed to join when the Rome Treaty was negotiated. It was not until the 1990s that the Community began to carry out serious reform, when it cut the level of protection for some major items by about half; and it was agreed in the Uruguay Round that the trade disrupting export subsidies would be eliminated in the following round: a tough challenge for both the Community and the United States.

While moving closer together on agriculture, the Community and the US diverged over environmental, cultural, and consumer protection issues, with the Europeans favoring standards which led to restriction of their imports from the US and which the Americans regarded as protectionist. Genetically modified organisms, hormone-treated beef, noisy aero-engines, data privacy, and films and television programmes were cases in point. The friction induced by the Union’s network of preferential arrangements has, on the contrary, been eased as tariffs were reduced in successive GATT rounds. That network had become so extensive, covering almost the whole of Europe and the less-developed countries, that only a few remained outside it, including Australia, Canada, Japan, New Zealand, South Africa, and the US. The Americans were irked by the EC’s preferences for particular countries. But the other side of this coin was the relationships that the EC established with large parts of the world’s South, which were, however, put to a hard test in the Doha Round of trade negotiations that opened in 2001, with the EU wanting a comprehensive agenda and the US preferring to concentrate on fields such as agriculture and the environment.

The Union’s desire to include matters such as investment, competition policy, public procurement, and trade facilitation, known as the ‘Singapore issues’, was motivated partly by the view that the world should start moving, as the EU itself had done, beyond the focus on tariffs and import quotas in order to deal with other areas of policy that have a growing impact on trade. But developing countries were not ready for this; and their negotiating power was enhanced by G20, led by Brazil, China, India, and South Africa, with others representing regional and trading interests. Agriculture also emerged, as usual, as an obstacle, with the European and American farm lobbies resisting liberalization; and for some less-developed countries there was an additional problem arising from the Union’s ‘everything but arms’ decision to abolish restrictions on imports from the 40 poorest countries, to the detriment of their competitors in other less-developed countries.

By May 2004 the Trade Commissioner, Pascal Lamy, was able to offer to reduce the Union’s insistence on the Singapore issues and to negotiate the removal of all export subsidies, thus enabling the negotiations to move forward in that year. At the same time a surge in imports of clothing from China gave a foretaste of the scale of the challenges to be expected to follow from the size of the Chinese economy and the speed of its growth, with similar impact from India likely to follow; and Chinese accession to the WTO in 2001 was to make it harder for the Union to react with anti-dumping measures.

Since then Doha has floundered on the rocks of intransigent behaviour on all sides and is currently deadlocked on a number of basic issues. Whatever the ultimate outcome, there will be consideration of the viability of further trade rounds that have to be approved unanimously by 150 states, and of whether a different route towards international trade liberalization will be required; and the Union will have to consider whether, and if so how, its own experience of the last half-century can be applied in the wider world.

The EU, its neighborhood, and the developing world

Whereas relations with the US are important for all member states, individual states have special relationships with particular countries in most of the rest of the world; and many of these became shared by the Union as a whole. This, like much else, stems from the Treaty of Rome. France wanted advantages for its colonies, and made this a condition for ratification of the treaty. So the Community as a whole granted free entry to imports from them and provided aid through the European Development Fund (EDF). The same applied to territories relating to Belgium, Italy, and the Netherlands; and the resulting association was the original basis for the present Cotonou Convention. French pressure also led to preferential agreements for Morocco and Tunisia; and these were the forerunners of the present far-reaching system of agreements with neighboring states.

After they became independent, the association with former colonies was transmuted through a Convention that provided for joint institutions: a Council of Ministers, Committee of Ambassadors, and Assembly of Parliamentarians. Following British accession, the Commonwealth countries of Africa, the Caribbean, and the Pacific joined in negotiating the Lomé Convention. This broadened the participation to include most of Africa and the Caribbean islands, as well as a number of islands in the Pacific, known collectively as the ACP countries. It removed some vestiges of the colonial system and has expanded the aid towards a level of €3 billion a year since the 1990s, together with money to cushion the associates against falls in their income from commodity exports.

The Lomé Convention was renewed for the fifth time at Cotonou in the year 2000, in difficult circumstances. For the associates were disturbed by the erosion of the margins of preference as tariffs had been reduced in successive GATT rounds; and the Union was concerned that, despite the massive quantities of aid, almost all of Africa remained in bad shape, owing at least partly transfer of powers.. Enough was at stake, however, to win the agreement to the fifth Convention, both of the EU’s 79 African, Caribbean, and Pacific (ACP) partners, with the renewal of the aid programme, and of its member states, with the Convention’s recognition that adequate performance in governance would be a criterion for the allocation of aid, and that the associates were to prepare their economies to join the Union in a free trade area in 20 years’ time. Through the 1990s, moreover, the EU laid growing emphasis in its external relations on human rights, and the Cotonou Convention requires the participants to respect them.

By the end of the 1970s the Community also had a network of agreements according preferences and assistance to states around the Mediterranean, with content not unlike that of the Lomé Convention but without the multilateral institutions. The network included all the North African states-save Libya which declined to participate-together with Israel, Lebanon, and, at one remove from the Mediterranean, Jordan and Syria.

By the 1990s, a combination of economic difficulties, political instability, and rapid population growth in most of these countries, with consequent pressure to migrate to Europe, caused growing anxiety in the Union, particularly among its southern states. The outcome was a conference of ministers from the Union and its Mediterranean partners, held in Barcelona in 1995, which launched a ‘Euro-Mediterranean processes aimed at building a wide range of multilateral links across the basin.

However, the headline goal of the process-a free trade area by 2005-was soon to founder on the political differences of the partners and the constant distraction of the Eastern enlargement. With the coming of that enlargement, the Union engaged in a wholesale review of its links with its neighbors, with a particular eye on trying to keep the Union an open and accessible grouping.

Cotonou Convention, 2000–2020

The EU and ACP states agreed in 2000 to renew the Lomé Convention for the fifth time, for a 20-year period. The resultant Cotonou Convention is revised every five years and the aid protocols are also limited to five-year periods. The ACP-EU Council of Ministers meets yearly to review progress.

• Trade is at the heart of the agreement. Negotiations between the EU and each ACP state for ‘economic partnership agreements’ are to result eventually in new trading arrangements (Economic Partnership Agreements) intended to lead to an EU-ACP free trade area by 2020. Meanwhile the free or preferential entry to the EU is to be retained.

• Aid was set at €13.5 billion for 2000–7, on top of €9.5 billion already allocated but not yet spent. Good performance in use of aid is to be rewarded.

• Poverty reduction is to be a favoured focus for development strategies.

• Non-state actors are to be encouraged to participate in the development process.

• Political dialogue indicates a harder-nosed EU approach, with good governance, respect for human rights, democratic principles, and the rule of law as criteria for aid policy, and with action against corruption.

Cotonou is coloured by the EU’s disappointment with the results of the preceding Lomé Conventions, attributed to poor governance in many countries. Given this starting point, the development of an EUACP free trade area is a very ambitious idea and one that has already slipped behind schedule.

The EU’s neighborhood

Thus it was in 2003 that the Commission proposed replacing the Euro-Mediterranean process, PHARE, and TACIS with a European Neighborhood Policy. In 2007, these former programmes were formally incorporated into the ENP, supported by a new financial instrument that will provide some €1.7 billion a year for cross-border cooperation, the development of civil society, and technical assistance.

While the ENP represents a significant commitment on the part of the EU to these countries, it remains to be seen whether it will have any significant impact on the development of a more stable, democratic, or prosperous environment around the EU’s borders, especially in light of the Arab spring of 2011 and the continued weakness of governance in several East European states.