EU Enlargement and Implications For The OIC Countries

Summary of an Article of Murat Ilkin by Anisah Musa

  1. Introduction

The recent enlargement of EU has created new political and economic dynamics. Along the benefits of enlargement , the EU and its new member states will face many challenges. Its growing power will have a significant impact on all regions of the world, including the OIC member states.

2. EU Enlargement and Relation with OIC Countries

The Central and Eastern Europe (CEECs) started to establish closer relations with the Union by signing cooperation agreements called Europe Agreements. Furtherrmore, another set of agreements, namely the association agreements, covering similar areas, was signed with Turkey, Malta and Cyprus.

  • Implications of EU Enlargement to CEECs ( Benefit of agreement with EU)

a) Strengthen  their economic and commercial relation with the Union. Trade btw those countries and the EU has been liberalized thru those agreements which aimed at progressively eliminating the majority of tariff barriers on traded goods and services. Nevertheless, some restrictions remained particularly in steel and textiles

b) Recognized the rights of CEECs to become full members of EU. EU membership requires that new members implement the ‘acquis communautaire’ (comprises all the EU’s treaties and laws (directives, regulations, decisions), declarations and resolutions, international agreements and the judgments of the Court of Justice) and establish a competitive market economy. In this regard, after enlargement, it is quite likely that those countries may face further challenges in addition to the serious macroeconomic difficulties and structural imbalances. Their economies also suffer structural problems and inadequately functioning institutional infrastructure

c) Envisage (visualize possibility in the future) financial assistance by the EU to help finance social reforms in the CEECs. For instance , the PHARE Programme ( Poland and Hungary Asistance for Economic Restructuring Programme) has been instrumental in preparing the CEECs for EU membership. The aid which had been extended to include all CEECs was aimed to help them restructure their economies and facilitate the process of social and economic change . Within the context of pre accession strategy, this programmme had been supplemented by 2 new financial instruments; ISPA and SAPARD. ISPA provide financial support to investment in transport and environmental protection whilst SAPARD channel funds to agricultural reform and rural development project

d) Those countries have responsibility of adapting and implementing the Community legislation and strengthening their democratic institutions, public administration and organizations. They are expected to implement Community’s legislation fully, effectively and efficiently, This requires training of civil servants , public officials and professionals. For this purpose, a mechanism named twinning was created. This project brings together public admin and semi public organization in candidate countries with their counterparts in EU members with a view to assisting them during reorganization of their institutional activities

  • EU Enlargement and Turkey

a) Eliminated all duties and equivalent charges on imports of industrial goods from members of the EU. Furthermore, it harmonized its tariff and equivalent charges on imports of industrial goods from third countries with the Common External Tariff of the EU. It also has progressively adopted EU commercial policy and preferential tariff policy within last For some specifically ‘sensitive’ products, Turkey maintained rates of protection above those specified in the Common Custom Tariff

b) Turkey is progressively adopting many aspects of Common Agricultural Policy (CAP) although agricultural products are excluded from the Treaty. Agricultural products will be included in the Customs Union following Turkey’s full adaptation to EU’s CAP. EU will take into account Turkish agricultural interest when developing its agricultural policy

  • Relation btw EU and OIC Countries in the Mediterranean

a) In Nov 1995, EU placed its relation with non-member countries in the Mediterranean region on a new plane. This initiative, known as the Euro-Mediterranean Partnership or the Barcelona process includes 15 member states of EU and 12 mediterranean partner countries. This Barcelona Process is a regional framework that aims to bring concerned countries together at the political and technical levels to promote their common interests

b) The Barcelona Declaration expresses 3 main goals of the partners;

> To establish a common Euro-Mediterranean area of peace and stability based on fundamental principles including respect for human rights and democracy (political and security partnership)

> To create an area of shared prosperity thru the progressive establishment of a free trade area (FTA) btw EU and its mediterranean partners accompanied by substantial EU financial support for economic transitions in the partners and for social n econ consequences of this reform process

> To develop human resources, promote understanding btw cultures and rapprochement (increased understanding) of the peoples in the Euro-medi regions as well as to develop free n flourishing civil societies

c) Mediterranean Assistance (MEDA) programme from EU to medi partners which is the principal financial instrument of EU for implementation of euro-medi partnership.

  • Relation btw EU and Gulf Cooperation Council (GCC)

a) In 1989, GCC and EU concluded a Cooperation Agreement to facilitate econ n commercial relations btw both sides. Working groups were established in the fields of industrial cooperation , energy and environment. This agreement also foresees holding talks on FTA btw EU and GCC.

 

3. Economic impact of EU Enlargement on OIC Countries

Main effects will be felt thru changes in the direction of the foreign trade in G&S, international migration, workers’ remittances (a sum of money sent), FDI flows, international job division and other related econ policies and increasing econ strength of the EU at the world level.

Pros Cons
1) Generate a set of opportunities for the neighbouring Mediterranean and African OIC countries. Foremost among these is the opening of the domestic markets of the newly-acceding (come to) countries thru Barcelona Process

 

1)Change in the direction of migration flows:

Migration from the new members towards the more developed EU members is likely to replace the masses from  the Medi neighbours and African countries who are mostly OIC countries. Increase unemployment among the workers who have already migrated to  EU countries from neighbouring OIC countries. May also decrease workers’ remittances being sent to their home countries

 

2) EU intends to promote cooperation with Medi partners. At the first stage, this could be achieved thru more substantial involvement of the medi partners  in the relevant EU programme within existing MEDA framework

 

2) The present members of EU may also like to encourage investments in the new members. Furthermore, competitive wages and the EU funds being invested in the structural projects in the newly-acceding countries could bring an advantageous econ environment to invest more in thse countries. Thus, EU funds which could be invested in the neighbouring OIC countries would be redirected to the new members

 

3) The new neighbourhood policy of EU, ‘Wider Europe Neighbourhood’ will encourage regulatory reform in neighbouring OIC countries, esp in services sector. This can give a strong boost to their econ growth n competitiveness.

 

Econ impact of EU enlargement on OIC partners shud be viewed from a broader perspectives involving not only direct trade, investment n  other macroecon effects but also further econ policy reforms that constitute the driving force behind econ growth perfomance

 

3) EU may easily become a unilaterally rule-making organization in global trade n investment relations and force other parties to obey its own rules n regulations
  4) European standards for the importation of goods are highly detailed , qualified and at the same time , very much limiting. They include measures or standards on sanitary and phytosanitary issues, animal health, environmental aspects etc

 

Thousands of pages long of European trade rules act in fact as real barriers. Learning n understanding those trade rules also mean additional costs.

 

Even if they manage to learn, they will not be able to produce their products according to standards either bcoz techno or cnnot keep production cost at competitive levels. In this way, EU will be able to protect its domestic industries.

 

 

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