policies in the europen union
No. 489
September 18, 2003
EU Enlargement
Costs, Benefits, and Strategies for Central and
Eastern European Countries by Marian L. Tupy
Executive Summary
The accession of eight Central and Eastern
European countries (CEECs) to the European
Union in 2004 will bring some important benefits. The new members will gain from reduced barriers to trade and investment. By 2010, the movement of labor will also be freed. But accession to the EU is neither a necessary nor a sufficient condition for economic growth. The combined effects of market access and economic liberalization, not
EU membership, optimize economic growth.
Unfortunately, the incoming EU members had to choose between the common market on the one hand and economic liberty on the other.
Instead of concluding free-trade agreements with the EU, the CEECs were cajoled into an increasingly centralized superstate, in which most of their comparative advantages will be legislated out of existence. As a result, economic growth in
Central and Eastern Europe (CEE) will continue to be suboptimal. The loss of potential future economic growth will be only partly offset by the
CEEC’s access to the European single market.
Following the collapse of communism, the
CEECs searched for a quick way to prosperity, and
EU accession seemed like a rational step forward.
Unfortunately, the geopolitical aim of the European
elites to rival the United States enjoys clear precedence over the developmental needs of the CEECs.
Compliance with centralized EU regulations in three areas—labor, agriculture, and the environment—will impose the most significant costs on the CEECs. Western European labor regulations will make many workers in the less-productive
CEECs less competitive; agricultural subsidies will favor current EU members over future ones; and stringent environmental regulations will impose a cost of up to 120 billion euros on CEECs.
Accession members should be wary of future EU
initiatives,
September 18, 2003
EU Enlargement
Costs, Benefits, and Strategies for Central and
Eastern European Countries by Marian L. Tupy
Executive Summary
The accession of eight Central and Eastern
European countries (CEECs) to the European
Union in 2004 will bring some important benefits. The new members will gain from reduced barriers to trade and investment. By 2010, the movement of labor will also be freed. But accession to the EU is neither a necessary nor a sufficient condition for economic growth. The combined effects of market access and economic liberalization, not
EU membership, optimize economic growth.
Unfortunately, the incoming EU members had to choose between the common market on the one hand and economic liberty on the other.
Instead of concluding free-trade agreements with the EU, the CEECs were cajoled into an increasingly centralized superstate, in which most of their comparative advantages will be legislated out of existence. As a result, economic growth in
Central and Eastern Europe (CEE) will continue to be suboptimal. The loss of potential future economic growth will be only partly offset by the
CEEC’s access to the European single market.
Following the collapse of communism, the
CEECs searched for a quick way to prosperity, and
EU accession seemed like a rational step forward.
Unfortunately, the geopolitical aim of the European
elites to rival the United States enjoys clear precedence over the developmental needs of the CEECs.
Compliance with centralized EU regulations in three areas—labor, agriculture, and the environment—will impose the most significant costs on the CEECs. Western European labor regulations will make many workers in the less-productive
CEECs less competitive; agricultural subsidies will favor current EU members over future ones; and stringent environmental regulations will impose a cost of up to 120 billion euros on CEECs.
Accession members should be wary of future EU
initiatives,